Preamble

The House met at Half-past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

DEATH OF A MEMBER

Mr. Speaker: I regret to have to inform the House of the death of George House, Esquire, Member for the Borough of St. Pancras, North Division, and I desire on behalf of the House to express our sense of the loss we have sustained and our sympathy with the relatives of the honourable Member.

PRIVATE BUSINESS

Mr. C. S. Taylor: On a point of Order, Mr. Speaker. The Private Business and the Notices of Motion relating to Private Business are not now circulated with the Order Paper. For the convenience of hon. Members in knowing what Private Business is to be taken, could not instructions be given to the Vote Office to circulate the Private Business and Notices of Motion with the Order Paper daily?

Mr. Speaker: I will bear that request in mind, but I am bound to point out that this was considered by the Committee and turned down. However, I will bear in mind what the hon. Member has said.

Mr. Taylor: Thank you very much indeed, Mr. Speaker, but I think that at that time there was a great shortage of paper. If this information could now be circulated with the Questions daily, it would be of great assistance to hon. Members.

Captain John Crowder: I have been told at the Vote Office, Mr. Speaker, that if hon. Members ask for these Papers they can have them. I asked for them and I received them for some time. Then the Vote Office stopped sending them, but they are now sending them again.

Mr. Speaker: As I said, I will look into the matter. I am not au fait with it at the moment, but it has been raised and I will consider it.

ASHDOWN FOREST BILL

Read a Second time and committed.

BOLTON CORPORATION BILL

To be read a Second time upon Wednesday, 16th February.

BRADFORD CORPORATION BILL

To be read a Second time Tomorrow.

LONDON COUNTY COUNCIL (GENERAL POWERS) BILL

RIVER GREAT OUSE (FLOOD PROTECTION) BILL

Read a Second time and committed.

BARNSLEY CORPORATION BILL (By Order)

BRITISH TRANSPORT COMMISSION BILL (By Order)

CITY OF LONDON (VARIOUS POWERS) BILL (By Order)

HALIFAX CORPORATION BILL (By Order)

SWINDON CORPORATION BILL (By Order)

WEST BROMWICH CORPORATION BILL (By Order)

Second Reading deferred till Tuesday next.

Oral Answers to Questions — NATIONAL INSURANCE

Aged and Sick Persons, Glasgow

Mr. Carmichael: asked the Minister of National Insurance how many aged and sick people on the Assistance Board's registers in Glasgow received special grants for clothing and other goods in kind between July and 31st December, 1948, and what was the cost of the same; and how many were assisted with such aid by Glasgow Corporation and what was the cost of the same over a comparable period when the charge for such assistance to the aged and sick was met by local rating.

The Minister of National Insurance (Mr. James Griffiths): Separate figures for the aged and sick are not available but during the period 5th July to 21st December last 3,437 grants for clothing, bedding, etc., to the total amount of £14,660 were made to persons receiving National Assistance in Glasgow. There are no comparable figures available in respect of grants by the Corporation as they ceased to be responsible for old age pensioners as long ago as 1940.

Mr. Carmichael: Is the right hon. Gentleman aware that during the last six months, when we had the responsibility for supplying clothing to the aged and sick, Glasgow Corporation spent £50,000? Is he further aware that there is a serious shortage of supplies of clothing for the aged people in the City of Glasgow, and that the promise made by himself and the Department was that the people would be no worse off when they were transferred from the local authority to the national authority? May I ask him if, under the powers in the Act, he will consider with the local authority the possibility of making bulk purchases, so that the aged and the sick can be supplied more regularly with essentials?

Mr. Griffiths: I should be glad to discuss this matter with my hon. Friend. As he knows, this was particularly a Glasgow institution. I have given the figures for which he asked. On the larger question he raised, I will discuss that with him.

Friendly Society Staffs

Mr. Bossom: asked the Minister of National Insurance what decision has now been reached as to the incorporation of those persons previously employed by the friendly societies in the new National Insurance Scheme.

Mr. J. Griffiths: Arrangements for providing employment in the Ministry for friendly and approved society staffs who were engaged on the work of National Health Insurance were made in accordance with the report of the Advisory Committee which I set up to inquire into this matter. A copy of the Report is in the Library of the House. Established posts were offered to some 96 per cent. of the permanent staff who applied for transfer and in addition a large number of temporary staff have been given temporary employment.

Mr. Bossom: Can the Minister say what he will do about the others who are not employed, for there are something like 200 of them; and is he aware that Socialist candidates at the last Election, in a written pledge, agreed to the employment of these people. What will he do about those who are not being employed?

Mr. Griffiths: I have nothing to do with that. In the case of persons who have not been found employment or not found suitable, there are provisions, if they are qualified, for compensation in regulations already laid before and approved by the House.

Squadron-Leader Fleming: Are we to understand that the 4 per cent. who were not found employment under the national authority have been refused because they have been found unsuitable?

Mr. Griffiths: The hon. and gallant Member is under a misapprehension. I said 96 per cent. of them had applied.

Mr. Tolley: Can my right hon. Friend tell the House the total percentage of those so displaced by the new Act who have now been given full employment?

Mr. Griffiths: The number absorbed into our Ministry is about 4,700 permanent appointments and about 2,000 temporary appointments.

Widows

Lieut.-Commander Clark Hutchison: asked the Minister of National Insurance why a woman, who is in receipt of widow's pension under the Contributory Pensions Acts, and who is off work due to illness, is refused any temporary increase in her pension on the ground that during her absence she is receiving some payment of salary from her employer.

Mr. J. Griffiths: I am collecting further details about the case which I understand the hon. and gallant Member has in mind, and I shall be happy to discuss it with him as soon as I have the necessary information.

Lieut.-Commander Hutchison: asked the Minister of National Insurance why a woman who is entitled to the widowed mother's allowance, and who is in employment, is not eligible for sickness benefit when off work due to illness.

Mr. J. Griffiths: A woman who is entitled to widowed mother's allowance and is in employment receives the allowance in full for any week during which her earnings are interrupted on account of sickness, but is precluded by the National Insurance (Overlapping Benefits) Regulations from receiving sickness benefit at the same time. Copies of these regulations and the Report of the National Insurance Advisory Committee on them are available in the Vote Office.

Industrial Diseases

Mr. Touche: asked the Minister of National Insurance whether any decision has yet been taken to include tuberculosis contracted by nurses in the course of their employment in the list of Industrial Diseases under the National Insurance (Industrial Diseases) Act.

Mr. J. Griffiths: No, Sir. The hon. Member will be aware, however, that the Departmental Committee on Industrial Diseases has recently submitted its Report, and I shall take an early opportunity of consulting the Industrial Injuries Advisory Council on the matter in the light of the Committee's Report.

Mr. Touche: asked the Minister of National Insurance whether any action has been taken regarding the recommendation of the Dale Committee to set up an Advisory Standing Committee to inquire into the question of revising the current list of industrial diseases.

Mr. J. Griffiths: I would refer the hon. Member to the reply which I gave to the hon. Member for Wigan (Mr. R. Williams) on 25th January, a copy of which I am sending him.

Regional Administration

Mr. Carmichael: asked the Minister of National Insurance if, in view of the exacting administrative duties centralised on the headquarters of the Ministry of National Insurance in Newcastle, and the serious delays caused in most districts in meeting claims, he will consider establishing regional offices in Scotland, Wales, London and such other areas in England as may be determined by population and efficiency.

Mr. J. Griffiths: The work now being done at Newcastle consists mainly of keeping the contribution records of insured persons, and I do not think it would

make for greater efficiency to distribute it among a number of regional offices as my hon. Friend suggests. I would add that complaints of general delay have in fact been few but if my hon. Friend has any special cases in mind perhaps he will let me have the details.

Oral Answers to Questions — EMPLOYMENT

Domestic Service (Germans)

Mr. Leslie Hale: asked the Minister of Labour why German women can obtain permission to enter this country to work in domestic service but are unable to obtain permission to enter this country to work in export industries.

The Minister of Labour (Mr. Isaacs): After consultation with other Ministers concerned, I am prepared to consider applications from employers for permission to employ Germans, either men or women, generally, subject of course to the usual safeguards.

Mr. Bramall: Does that mean that the employer must have a particular German woman in mind before he applies, or can he apply to the Ministry to employ a German woman who would then be recruited in Germany?

Mr. Isaacs: No, we do not undertake recruitment in these special circumstances; he must have a person in mind.

Horticultural Industry, Cornwall

Mr. Douglas Marshall: asked the Minister of Labour what is the number of unemployed in the horticultural industry in Cornwall to the latest available date.

Mr. Isaacs: Separate figures are not available for the horticultural industry as such. The latest available figures for farm workers and gardeners are: Farm and market garden work, 89 men and 12 women and for gardening and nursery work (including job gardening) 26 men.

Mr. Marshall: May I ask the right hon. Gentleman to bring this to the notice of the Minister of Food?

Mr. Beechman: While I am obliged to the Minister for having sent me the December figures during the Recess, as I requested, since these show a noticeable


increase on the September figures, would he be so good as to give this matter constant and special attention?

Mr. Isaacs: It is having consideration. The problem is that at this period of the year there is unemployment in agriculture.

Commander Agnew: Would it help to reduce the numbers of those unemployed if the Minister of Agriculture adopted a more sympathetic attitude to the request of the broccoli industry for additional protection from foreign imports?

Factory Inspectors, Wales (Welsh Language)

Mr. S. O. Davies: asked the Minister of Labour how many of the factories inspectors in Wales are Welsh speaking.

Mr. Isaacs: I understand that four of the inspectors at present especially concerned with factories in Wales speak Welsh.

Local Authority Employees (Holidays)

Mr. Vane: asked the Minister of Labour whether his attention has been drawn to the practice of certain local authorities of arranging that Christmas and New Year holidays should be more generous in the case of employees who were members of their trade unions; and whether he will consider introducing legislation to prevent such discrimination.

Mr. Isaacs: I am not aware of such practices by local authorities and the second part of the Question does not therefore arise.

Mr. Vane: Has not the attention of the right hon. Gentleman been drawn to a much publicised decision of a rural district council in County Durham recently—a Labour-dominated council—and does he not think he should look into it further and take steps to prevent this discrimination being repeated?

Mr. Isaacs: I repeat what I said, that I am not aware of such practices. If the hon. Member will be good enough to let me have particulars of them, I will gladly look into the matter.

Skilled Labour, Scotland

Mr. Willis: asked the Minister of Labour what is the unfilled demand for skilled labour in Scotland at the latest available date; and what steps are being taken to meet it.

Mr. Isaacs: On 19th January there were vacancies for 18,500 men and women in Scotland. Without detailed inquiries I cannot say how many of these were for skilled workers. Where vacancies for skilled workers on essential work cannot be filled locally, and local accommodation is likely to be available, they are circulated to other areas for offer to suitable workers.

Mr. Hector Hughes: Can the Minister say how many of those vacancies are available to the 164 engineers dismissed from the Tullos factory in Aberdeen?

Mr. Isaacs: Any one of these vacancies is available for any person who has the skill and the opportunity of getting to the locality.

Hillington Industrial Estate

Mr. Gallacher: asked the Minister of Labour if he has considered the letter sent to him by the hon. Member for West Fife, in connection with redundancy in the Hillington Industrial Estate; and if he will make a statement.

Mr. Isaacs: I am aware of the redundancies which have occurred recently at the Hillington Industrial Estate. Workers who have become redundant are being given the assistance of the Employment Exchange service to find other work and I am in consultation with my right hon. Friend the President of the Board of Trade, who is doing everything within his power to provide more employment in the area.

Mr. Gallacher: Is the Minister aware that the district committee of the Engineers Union is very concerned about what is happening in Hillington and, in view of the statement made by the Leader of the House in Glasgow on Sunday that there was no unemployment in this country, will he see that these men are placed in jobs at the earliest possible moment?

Mr. Isaacs: It is our task to put the men into jobs as early as it is possible


to place them; but we cannot, of course, retain men on jobs where there is no work for them to do.

Oral Answers to Questions — NATIONAL SERVICE

Students

Mr. Hurd: asked the Minister of Labour why Mr. D. F. T. Abell who is now engaged on the second year course of training as a dental student and due to take his 2nd B.D.S. examination in June, is not being allowed continued deferment of military service so that he may complete his course; and if he will review this decision as being contrary to the announced policy of allowing students to complete professional training before doing their National Service.

Mr. Isaacs: In view of the revised arrangements contemplated, I have now reconsidered this case and am prepared to grant Mr. Abell deferment to pursue his studies.

Squadron-Leader Fleming: asked the Minister of Labour whether men called up for service in the Armed Forces in, or before, August, 1947, will be released in time to commence their studies in the beginning of October, 1949.

Mr. Isaacs: Yes, Sir. In accordance with the programme of releases from the Forces which I announced on 18th January last in reply to the hon. Member for Stockton-on-Tees (Mr. Chetwynd), men called up before August, 1947, will ordinarily be released before the end of September, 1949. Men called up in August, 1947, will ordinarily be released not later than the end of October, 1949, but the actual dates of release will in many cases be earlier. Any intending students called up in August, 1947, who find that they are not due for normal release in time to start their studies next autumn will be allowed early release, if applied for by their university or college.

Squadron-Leader Fleming: Does that mean that anyone who wants to start his studies at the Manchester School of Technology in the first week of October, although called up in August, 1947, will be released towards the end of September so that he can present himself there in October?

Mr. Isaacs: This generally applies to colleges, but our arrangements are not

definitely complete yet and we are endeavouring to obtain exactly the same results.

Call-up, Scotland

Mr. Emrys Hughes: asked the Minister of Labour if he will give an estimate of the number of men likely to be called up in Scotland for military service in 1949.

Mr. Isaacs: Approximately 17,000.

Mr. Hughes: Does that include building workers?

Mr. Isaacs: I thought that building workers were included amongst workers generally.

Mr. Hughes: In view of the shortage of building workers, emphasised by the Joint Under-Secretary of State for Scotland last Friday, will the Minister consider postponing the call-up of building workers?

Mr. Isaacs: No, Sir.

Oral Answers to Questions — SCOTLAND

Housing

Sir William Darling: asked the Secretary of State for Scotland what is the average cost to local authorities of houses built over the last 30 years on suitable dates.

The Secretary of State for Scotland (Mr. Woodburn): I am sending the hon. Member a copy of the Report of the Scottish Building Costs Committee and would refer him to the very full information on this subject in the Appendices I and IV.

Mrs. Jean Mann: asked the Secretary of State for Scotland how far he can encourage the permanent nontraditional type of house to meet local authority needs in Scotland; and if he is satisfied that the Scottish house of this type is superior to those imported and cheaper in price.

Mr. Woodburn: Except for types which make heavy demands on steel and other scarce materials, consideration is given to proposals for all types of approved non-traditional houses providing that they are competitive in price. Imported houses are not in substitution to the home production but a welcome addition.

Mrs. Mann: Is it not a fact that the imported houses are very much more expensive than the Scottish produced house; and does not my right hon. Friend consider that the Scottish factories are placed in a very awkward position if they are given orders spasmodically and not for mass production?

Mr. Woodburn: In reply to the first part of the question, in some districts there is not a great deal of difference in the price. In the Highlands, of course, all houses are much dearer than in the Lowlands because of the special conditions. I think the other point arises on a later Question.

Major Guy Lloyd: asked the Secretary of State for Scotland whether he is aware that there are 1,530 applications for homes before the Burgh of Barrhead; that last year's 40 completed houses were sufficient only to re-house those living in condemned property; that the present rate of building is insufficient to meet normal wastage; that although 140 houses are now being built they are not enough to house the homeless; and if he will now give permission to the Council to build at once all houses for which plans have been approved.

Mr. Woodburn: I am aware that the Burgh of Barrhead has had a need for houses for a great many years and regret that the building trade has not found it possible to complete more than 40 out of the 180 houses in hand. To start more houses than can be completed would cause delay by tying up materials needed to finish the houses under construction. In the meantime the Council are getting an allocation of 30 Blackburn houses which will supplement local building capacity. The Council are free to get all the houses under construction completed as soon as possible. They have recently been authorised to start another 20 and will secure further permission as they progress.

Major Lloyd: asked the Secretary of State for Scotland whether he is aware that there is a waiting list of 2,000 for homes in Renfrew who have qualified under the stipulation of 10 years' residence, and a further list of those with less than 10 years' residence; that only 122 houses have been built in the Burgh in 2½ years; that the Council had been prevented from going ahead with building

by the sterilising of housing ground in the vicinity of the airfield, and could not build for workers at Hillington because of the extension of the Airport; and if he will take steps to get all difficulties removed at the earliest possible moment to enable the Burgh of Renfrew to proceed with their housing programme.

Mr. Woodburn: There have been difficulties in making available land for housing but these have so far been resolved. On behalf of the Town Council the District Valuer is now negotiating for the acquisition of three areas in the Blythswood Estate extending to 41, 18 and 88 acres. The Town Council have 160 houses under construction, mostly at the earliest stage, and they have recently accepted 40 Blackburn houses which are to be started as soon as possible. In addition they will be authorised to start 150 more houses in approved contracts as progress is made with those houses now building.

Major Lloyd: Would the Secretary of State say a word or two about the great difficulty of the sterilisation of land around the airport because that is a matter which seems to be upsetting local authorities in Renfrew very much; and is he aware of the very great disappointment of those local authorities because they are unable to get on with housing and feel that they are being frustrated by the policy of the Government?

Mr. Woodburn: I think the hon. and gallant Gentleman must be misinformed for, of course, all these areas have houses to build and we are very anxious that they should get them completed.

Mrs. Mann: asked the Secretary of State for Scotland how many houses were built for letting purposes by private speculators between 1918 and 1939; and how many for similar purpose built by local authorities in Scotland.

Mr. Woodburn: The number of houses built for private owners between 1918 and 1939 inclusive was 107,000 of which 8,000 were for letting. In the same period 227,300 houses were built for letting by local authorities.

Mrs. Mann: In view of the very revealing figures which have been given, can my right hon. Friend explain why


there should be any agitation whatever to allow private enterprise to start building houses once again?

Mr. Keeling: Does the Minister agree that the term "speculators" is unjust and offensive to people who have used their savings to build houses for letting to their fellow-citizens?

Lieut.-Colonel Sir Thomas Moore: asked the Secretary of State for Scotland what plans he has in view for increasing the number of houses for letting and for sale in the burgh of Ayr.

Mr. Woodburn: The Town Council have at present 360 permanent houses under construction and were recently authorised to start 32 more. In addition they have accepted an offer of 60 of the new Blackburn type. All of these houses are for letting. No houses for sale are proposed in the meantime.

Sir T. Moore: Despite that apparently optimistic statement is the right hon. Gentleman aware that, whereas in 1945 there were 2,000 families homeless in Ayr, today 2,500 families are homeless, due not to the inefficiency of the Town Council but to the right hon. Gentleman's own anti-social policy?

Mr. Woodburn: I am afraid that the hon. and gallant Gentleman's history is a bit awry. These people are homeless because the opportunity was not taken between the wars, when labour and materials were available, to rehouse them.

Mr. E. P. Smith: Can the right hon. Gentleman assure us that these houses which he envisages will not prove to be castles in the air?

Commander Galbraith: Could the right hon. Gentleman state the number of homeless families in Ayr in the year 1939?

Mr. Woodburn: In 1939 quite a number of people could not afford to ask for a house.

Sir T. Moore: The answers given to these questions are so entirely unsatisfactory that I give notice that I shall raise this matter on the Adjournment.

Sir Basil Neven-Spence: asked the Secretary of State for Scotland when he expects to be able to allot to Stromness

the 10 Swedish timber houses for which that burgh has asked.

Mr. Woodburn: By agreement with the County Council, their allocation of 20 houses will be erected inside Kirkwall Burgh. No additional Swedish timber houses are at present available for allocation, but the claims of Stromness will be considered when any further programme is contemplated.

Sir B. Neven-Spence: But why not give the Burgh of Stromness a chance to get at least half of these extra houses given to the county?

Mr. Woodburn: Of course, we are very careful before interfering with the discretion of the county council and it was decided in this case that they were to go into Kirkwall Burgh.

Mr. Emrys Hughes: Is my right hon. Friend aware that the Chancellor of the Exchequer is charging import duty on Swedish houses? Will be make representations to have the import duty done away with and the money given over to the local authorities?

Mr. Woodburn: I do not think my hon. Friend should be worried about it, because the Chancellor also pays for Swedish houses and what he takes from one pocket he puts into another.

Mr. N. Macpherson: asked the Secretary of State for Scotland what steps he will take to provide houses for persons who have left the area of one local authority and taken up temporary residence in an adjoining area, and for whom both local authorities in the areas where they used to be and where they now are domiciled, disclaim responsibility.

Mr. Woodburn: The letting of houses is a matter for local authorities themselves. I have no evidence that the difficulty to which the hon. Member refers is widespread. I shall, however, bring it to the notice of the Scottish Housing Advisory Committee, who have recently been asked to survey local authorities' existing method of allocating tenancies and to make recommendations.

Mrs. Mann: asked the Secretary of State for Scotland if he has been made aware that the Weir Housing Corporation of Coatbridge will he forced to close their factory in June unless orders for


houses are immediately forthcoming; that this firm are capable of producing 100 permanent houses per week at low competitive cost with unskilled labour; and if he will immediately make use of this firm to increase the supply of houses.

Mr. Woodburn: I am in close touch with Messrs. Weir regarding their capacity. They themselves are tendering for local authority orders and I have asked the Scottish Special Housing Association and Messrs. Weir to consider co-operation in making continued use of this firm's output.

Mr. Willis: asked the Secretary of State for Scotland whether, in view of the fact that it is no longer shortage of materials that is retarding the rate of completion in house building, he will approach the trade unions in the building industry with a view to discussing methods for increasing the output.

Mr. Woodburn: I have discussed this question with my right hon. Friend the Minister of Works and I have arranged to meet the Joint Advisory Panel of the Building Industry on 11th February.

Mr. Willis: Will my right hon. Friend discuss the question of output bonuses?

Mr. Woodburn: Yes, I propose to discuss all the possibilities of increasing productivity in the building trade.

Mr. Emrys Hughes: asked the Secretary of State for Scotland how many houses are being built in the fishing village of Maidens, Ayrshire; when they were begun; when they are likely to be completed; and what has been the reason for the delay to date.

Mr. Woodburn: Progress on this scheme has been delayed from time to time by shortage of materials, and bad weather on an exposed site. Of 10 houses started in November 1946, two are completed, four are expected to be completed shortly, and the remaining four later in the year.

Mr. Hughes: Is the Minister aware that people from this village are threatened with eviction from huts on the Turn-berry Golf Course? Will he see that housing takes precedence over golf?

Police Training College (Commandant)

Mr. Carmichael: asked the Secretary of State for Scotland what special qualification Air Vice-Marshal Ronald Graham had for the appointment of Commandant of the Scottish Police Training College; whether he has considered the resolution of protest made by the Scottish Police Federation against the appointment of a person with no police knowledge or supervision; and whether a person trained in police service could not have been found to fill this position.

Mr. Woodburn: I would refer my hon. Friend to the replies given on 25th January and 1st February to Questions on this subject.

Mr. Carmichael: Does not the Minister consider that the military mind in civil affairs is a bad thing and that it would be better to appoint somebody with a knowledge of civil affairs instead of, say, a militarist?

Vice-Admiral Taylor: Appoint a pacifist.

Mr. Carmichael: I do not want an Admiral but somebody with civic knowledge.

Mr. Woodburn: I have had the opportunity of mixing with some of the people who have been running the Air Force, both administratively and otherwise, and I certainly formed a very high opinion of their capacity. In this case, the man was not appointed because he had been in the Air Force, neither was he debarred because of his Air Force service. He was appointed by a committee, including police people, who selected him, because of his outstanding ability for this job, as being the best man in all the circumstances.

Grazing Land, Loch Katrine (Afforestation)

Mr. Snadden: asked the Secretary of State for Scotland whether his attention has been drawn to the proposal by the Corporation of the City of Glasgow to clear part of the catchment area of Loch Katrine of sheep and to give the land over to afforestation; whether he has considered the representations made to him on the matter by the Central Agricultural Executive Committee; and whether he


has made any decision to condone this loss of food production or to utilise his powers under the Agriculture (Scotland) Act, 1948.

Mr. Woodburn: Yes, Sir. I am advised, however, that the standards normally applied in determining whether grazing land should be diverted to afforestation favour forestry on this particular part of the catchment area, and I felt that I could not therefore object to the proposal.

Mr. Snadden: Is the right hon. Gentleman aware that, at a time when we face a meat famine and the Government are appealing for more meat for the country, to wipe out 1,000 sheep is sure to shake agricultural confidence in the Government's appeal?

Mr. Woodburn: In this particular area a great many special features had to be taken into account. I was advised both by my agricultural and by my forestry advisers and the balance in this case lay in favour of afforestation.

Major Ramsay: Will the Minister consider publishing the nature of those considerations?

Mr. Snadden: Can the right hon. Gentleman indicate whether they were grounds of public health or otherwise?

Mr. Woodburn: Partly.

Occupational Therapy, Aberdeen

Mr. Hector Hughes: asked the Secretary of State for Scotland if he is aware of the need for an occupational therapy clinic in the city of Aberdeen, which could be attended by patients after their discharge from the Aberdeen Royal Mental Hospital; and if he will take steps to have one established there.

Mr. Woodburn: I am asking the local medical authorities concerned to consider the hon. and learned Member's proposal.

Mr. Hector Hughes: Will my right hon. Friend bear in mind that the whole of the North-East of Scotland would benefit by the establishment of such an occupational clinic in Aberdeen?

Mr. Woodburn: Yes, Sir.

Milk Supply (Report)

Colonel Gomme-Duncan: asked the Secretary of State for Scotland when publication may be expected of the report submitted in July, 1948, by the committee appointed by him to review the services presently in operation in Scotland for the supply and quality of milk.

Mr. Woodburn: I am hoping to publish this report shortly.

Agricultural Water Supplies (Grant)

Mr. Niall Macpherson: asked the Secretary of State for Scotland on what grounds the Department of Agriculture is refusing to pay a grant under the Agricultural (Miscellaneous Provisions) Acts, 1941 and 1944, in respect of schemes for agricultural water supplies on the basis of the lowest competitive offer, as scheduled by tradesmen in the district where the water supplies are to be introduced.

Mr. Woodburn: The proportion of the cost of approved schemes for agricultural water supplies which may be paid by way of grant is not statutory, but at present the grant payable is 50 per cent. of the cost normally incurred for work of the kind in the particular district concerned. I am not, however, prepared to authorise this percentage where the rates charged are above normal, even if the offer is the lowest received. In such cases, grant will be paid on the normal rate, or on a valuation of the completed work.

Mr. Macpherson: While the grants may not be statutory in one sense, are they not statutory in the sense that they are of such proportion as the Treasury may approve; and does the right hon. Gentleman really think it is fair, when the Treasury have approved a certain proportion of the grant and the cost has been incurred, that the owner of the land who carries out the improvements should not get the full proportion of the cost incurred?

Mr. Woodburn: I am afraid the control is a little tighter than that and we wish to see the work carried out economically and to consider various other factors before deciding on the grant.

Western Isles (Schemes)

Mr. Malcolm MacMillan: asked the Secretary of State for Scotland whether he is aware that several hundred people in Bernera Island are denied the benefits of the National Health Service through isolation in stormy weather owing to delay in constructing the proposed bridge to link this island with the Isle of Lewis; what contribution he is prepared to make to the cost of the bridge; and when work is expected to begin.

Mr. Woodburn: I am aware of the need for better access to the island of Bernera. With regard to the proposed bridge, the county council have been authorised to carry the preparatory work for this project to the contract-letting stage in order that the actual construction work may be put in hand without delay, when it becomes possible to provide the necessary materials. Sixty per cent. of the cost of the preparatory work is being met by the Ministry of Transport and 25 per cent. by my Department.

Mr. MacMillan: While we are grateful that the Treasury, after inordinate delay, have now agreed to permit the survey to go ahead, the death of another of my constituents has been reported and, because she was not able to go to the mainland, a young girl patient was not able to have urgently needed surgical treatment. Will my right hon. Friend and the Government take urgent steps to see that this work is done in case the electorate are guilty of an electoral aberration in 1950 and the Government find themselves in the position of not being able to honour their pledge?

Mr. M. MacMillan: asked the Secretary of State for Scotland whether he is aware that many ex-Service fishermen and others in the Western Isles are unable to take any advantage of the grants and loans available for fishing boats or gear because of the lack of piers, boat shelters and jetties; that this is causing unemployment and loss of fresh fish supplies; and whether he will expedite the settlement by his Department of all cases where schemes are sponsored by local authorities, including the proposed Portnaguran, Isle of Lewis, pier.

Mr. Woodburn: I am aware that there is a widespread demand for the provision of piers in the Western Isles and any reasonable proposals in this connection.

which are put forward by the responsible local authorities, will receive sympathetic consideration. The County Council of Ross and Cromarty are considering, at my request, whether the needs of Portnaguran would be met by the provision of a pier and boat-slip.

Mr. MacMillan: Is my right hon. Friend aware that for more than 90 years we have been having sympathetic consideration for the Porthnaguran Pier, but that sympathetic consideration has neither built the pier nor caught any fish? Will he make these grants useful to the men by going ahead with the work?

Mr. Woodburn: I think my hon. Friend might turn his eyes to some of the things which have been done occasionally and not always to things which have not been done.

Mr. MacMillan: Perhaps I am more familiar with that area and its problems than my right hon. Friend. I am not in the least ungrateful for the grants for boats and gear which are most generous, but we cannot take advantage of them until the piers and shelters are built. Surely that calls for some action by the Treasury and the right hon. Gentleman?

Mr. M. MacMillan: asked the Secretary of State for Scotland whether he will now state the position regarding the proposed road, jetties and agricultural developments in the Scottish Department of Agriculture estate, the Isle of Vatersay; and when these schemes are to begin.

Mr. Woodburn: I have invited the County Council of Inverness to co-operate with me in the provision of one main jetty to serve as access to the island and in the provision of roads of county highway standard from that jetty to the main centres of population. In addition to the normal grant of works of this kind, I am prepared to make a supplementary contribution from estate funds which will limit their contribution. I have also made an offer to the tenants to meet the full capital cost of a Hill Farm Improvement Scheme for the island grazings. These schemes will be put in hand when agreements have been reached with the county council and the tenants.

Mr. MacMillan: May I assure my right hon. Friend that this will give the greatest possible satisfaction to all concerned?

Calves (Subsidy Payments)

Colonel Gomme-Duncan: asked the Secretary of State for Scotland how many persons are employed in Scotland approving calves for subsidy payment; what were the costs of administration incurred in the last four months; and how many calves, male and female, have been approved for subsidy and how many rejected by the certifying officers.

Mr. Woodburn: Thirty-four certifying officers are employed on this work at present. The scheme had been in operation for five months at 31st January, 1949. Administrative expenses for the five months are estimated at £13,000, of which £10,500 was for certifying officers' salaries and travelling expenses. In round figures, the number of calves ear-marked and certified as eligible was just over 100,000, of which 23,000 are steer calves and the remainder heifers. The number of calves rejected was 4,900.

Dr. Segal: Can my right hon. Friend say whether the female calves are approved by male certifying officers and vice versa?

Land Court

Mr. McKinlay: asked the Secretary of State for Scotland what additional members of the Scottish Land Court are to be appointed; what qualifications are required; and what method of selection will be adopted.

Mr. Woodburn: It is proposed to appoint two members of the Scottish Land Court, of whom one will be in place of a member retiring under the age limit on the 21st March next. These two members should be practical agriculturists of standing with experience of agricultural arbitrations and farm records; one with special knowledge of hill farming and the other with special knowledge of dairy farming. The appointments wilt be on a full-time basis. The appointments are made by His Majesty on the recommendation of the Secretary of State and my recommendations will be made after consideration of any applications sent to me and such inquiry as may be necessary, and after consultation with my right hon. and learned Friend the Lord Advocate, and the Chairman of the Land Court.

Sir W. Darling: May I ask if the qualification of speaking Gaelic is not important and would one of these officers have that qualification?

Mr. Woodburn: There is always one Gaelic-speaking member of the court.

Lieut.-Commander Hutchison: Will either of the new members be Gaelic-speaking?

Mr. Woodburn: I would require notice of that question.

Mr. McKinlay: They speak Edinburgh.

Agricultural Camp, Perthshire

Colonel Gomme-Duncan: asked the Secretary of State for Scotland what, since inception, are the maximum, minimum and present number of inmates in the camp for agricultural workers at Forgandenny, Perthshire; what, since inception, are the equivalent numbers of staff to look after them; and what, since inception, has been the average number of inmates regularly employed on agricultural work outside the camp.

Mr. Woodburn: The maximum, minimum and present numbers of agricultural workers accommodated at the hostel since its inception in February, 1948, are 25, four and five respectively. The maximum number of hostel staff employed was six which has been reduced to three. The average number of the agricultural workers hired out to farmers to date is between eight and nine. Owing to the lack of demand for these workers, it was recently decided to close the hostel in the meantime.

Planning

Mr. Gallacher: asked the Secretary of State for Scotland if he has considered the letter sent to him by the Member for West Fife, in connection with a resolution on the need for a Scottish Planning Commission passed by the Amalgamated Engineering Union National Committee in 1946; and whether he will make a statement.

Mr. Woodburn: I have considered the resolution in question along with a similar resolution of the Scottish Trades Union Congress. Scotland is already served by several bodies concerned with planning its


industries and services and these are co-ordinated in the Scottish Economic Conference which advises the Secretary of State who is, under Statute, the Planning Minister for Scotland.

Oral Answers to Questions — DISABLED WAR PENSIONERS (MOTOR CARS)

Sir Ian Fraser: asked the Minister of Pensions if he will give details of his plan to provide free motor cars for certain disabled ex-Service men and women.

The Minister of Pensions (Mr. Marquand): As I stated in the House on 27th July last, plans have been made to supply 1,500 small motor cars to certain classes of seriously disabled war pensioners. Contracts for the cars have been placed with the Ford and Morris Companies, and certain adaptations of standard models have been arranged to meet the special needs of disabled persons. Twenty-three cars have so far been delivered and from now onwards the rate of supply should increase. I am pleased to say that I have been able to allocate 50 cars to blind pensioners. As the Hon. Member knows, the first of these is to be delivered to-morrow.

Mr. Vane: May I ask what arrangements the right hon. Gentleman has made for replacing these cars? They do not last for ever.

Mr. Marquand: That is a question which might appropriately be put when one of the cars is worn out.

Sir I. Fraser: May I ask the right hon. Gentleman to accept the thanks of these disabled men?

Mr. Chetwynd: Could the Minister say what rate of delivery he expects for these cars in the next few months?

Mr. Marquand: The rate of delivery has been a little disappointing up to date, due to the need of adapting each car to the special needs of disabled persons, but I have been promised that from the beginning of March we shall get 60 to 65 cars a month from the Ford Motor Company and 20 per month from the Morris Company.

Mr. Marlowe: Is the right hon. Gentleman aware that this scheme is not open to applicants of 70 years or more, on account of insurance arrangements which his Department has made, and will he make these cars available to such applicants if they are able to arrange their own insurance?

Mr. Marquand: That is another question.

Oral Answers to Questions — JEWISH DETAINEE CAMPS, CYPRUS

Dr. Segal: asked the Secretary of State for War what were the maximum and minimum numbers of British troops in charge of the Jewish Detainee Camps in Cyprus; and how many civilians were employed in connection with these camps.

The Under-Secretary of State for War (Mr. Michael Stewart): The greatest number of troops directly employed in running these camps was some 370 all ranks; this number has now been reduced to about 240 all ranks. The greatest number of civilians so employed was some 65, now reduced to about 40.

Dr. Segal: Would my hon. Friend consider the granting of home leave to some of these troops after their harrowing experiences on the Island?

Mr. Stewart: I will consider that, but my hon. Friend will realise that that is contrary to general practice and policy

Oral Answers to Questions — ARMY OFFICERS (RESIGNATIONS)

Mr. A. R. W. Low: asked the Secretary of State for War how many regular officers resigned or retired in 1947 and 1948, respectively; how many others applied to resign; how many have resigned or retired in 1949; how many others have applied to resign; and if he will circulate a table showing separate figures for each arm and branch of the Service and give particulars of numbers in each rank.

Mr. M. Stewart: During 1947, 510 Regular officers resigned or retired voluntarily; 61 applications to be allowed to resign or retire were refused. The corresponding figures for 1948 are 783 and


38; for January, 1949, 68 and three, A further 146 applications have been approved to take effect in coming months. I am circulating in the OFFICIAL REPORT tables giving the information asked for in the last part of the Question.

Mr. Low: Is not the figure that the hon. Gentleman has given the House of those who have resigned from January, 1949, extremely disquieting, following the latest announcements made to the House by the right hon. Gentleman the Minister of Defence of the alterations in pay and allowances of officers?

Mr. Stewart: This is a figure that is bound to cause concern, but the hon. Member is over-simplifying it if he links it entirely with pay. It must be remembered that the rules governing permission to resign or retire have progressively been relaxed, and for several reasons it was to be expected that in the years following the war this figure would go up.

Major Legge-Bourke: Would the hon. Gentleman agree that the greater proportion of officers who are gone are married; and is it not a fact that the reason why that percentage is so high is because of the local overseas allowances being so grossly unfair as between accommodated and non-accommodated men?

Mr. Stewart: I cannot accept that suggestion about the local overseas allowances. As I have intimated, there are several causes for these figures. One, of course, in the case of married men, is a difficulty about married quarters.

Mr. Scollan: Is the Minister aware that where people are dissatisfied with the salaries and conditions of their employment, and they retire en masse, it is generally called a strike and against the interests of society? Why should they not be treated in the same way in the Army?

Mr. Stewart: I think my hon. Friend is overlooking that permission is required for this action.

Brigadier Prior-Palmer: Would the hon. Gentleman inform the House what steps he is taking to halt this trend which is extremely serious?

Mr. Stewart: Yes, Sir. The House is aware of the steps we have taken and are taking about married quarters and

is acquainted with the recent improvements announced by my right hon. Friend the Minister of Defence.

Oral Answers to Questions — ELECTIONS, NORTHERN IRELAND

Sir Ronald Ross: asked the Prime Minister whether he is aware that the Prime Minister of Eire has taken steps to interfere with the elections for the Parliament of Northern Ireland; and if he will protest against such interference with elections in a part of the United Kingdom by the Government of a country outside the British Commonwealth.

Professor Savory: asked the Prime Minister whether he is aware that the Prime Minister of Eire has taken steps to give active support to Republican candidates at the General Election now being held in Northern Ireland; and whether he has protested to the Government of Eire, which is now a foreign country, against such interference in elections being held in a part of the United Kingdom.

The Prime Minister (Mr. Attlee): I assume that the hon. Members refer to the statement issued by the conference of representatives of all the Eire Parliamentary Parties, which was held in Dublin on 27th January. I do not think that any useful purpose would be served by making representations to the Eire Government on this subject.

Sir R. Ross: Is the right hon. Gentleman aware that, no doubt encouraged by the attitude of their Government, a mob of several hundred people, who were not voters in the constituency or British subjects, invaded Strabane last night and attacked people attending a Unionist meeting, throwing stones and bottles, and I understand women and girls were among the injured?

The Prime Minister: I have not had information of that incident. I have had news of quite a number of incidents in Northern Ireland which shows that elections there are not conducted on quite the same lines as over here.

Hon. Members: Oh!

Mr. Oliver Stanley: In view of the very serious allegations that the Prime Minister has made, will he now specify


the methods in which they differ and give the proofs on which he bases what I imagine—coming from the Prime Minister—is a considered statement?

The Prime Minister: I have had the complaint of the hon. Member for Londonderry (Sir R. Ross). I have also had complaints from persons on the other side in politics. I have also had explanations from persons as to why this occurred, and it is quite obvious, I think everybody knows, that elections in Northern Ireland tend to be a good deal rowdier than on this side of the water.

Mr. John McKay: Is the Prime Minister aware that Robert Emmet, the great Protestant and patriot, when he was sentenced, said, "When my country takes its place among the nations of the world then, and not till then, let my epitaph be written"? Is it not sad that that epitaph cannot yet be written? Is the Prime Minister aware that it is to the best interests of this nation that a more enlightened view of the needs of this country and the necessities of Ireland should be ventilated in Northern Ireland so that—

Mr. Speaker: The hon. Member does not appear to me to be asking a question. He appears to be making a speech.

Professor Savory: May I ask the right hon. Gentleman if he is aware that the Prime Minister of Eire instituted a collection to be taken last Sunday and the Sunday before in every parish in Eire and that this money, amounting to over £50,000, was taken to Belfast by a delegation consisting of two Senators, a deputy and a barrister, of which I have a photograph in my hand taken at an hotel in Belfast; and according to the "Irish Times" the first instalment of £300 is to be paid to each of the Republican candidates towards their election expenses?

The Prime Minister: The hon. Member seems to be giving me information rather than asking a question.

Professor Savory: Why should I not?

Mr. Stanley: May I ask the Prime Minister whether he is not constituting a very serious precedent in making no protest against this official interference with an election by the Government of

another country, and whether it is not a precedent which may now be willingly followed by other Governments which are more hostile to his party?

The Prime Minister: I understand this was not the action of a Government but that it was action by a number of persons of all parties. It is not clear that this was a governmental action.

Professor Savory: The Prime Minister of Eire organised it.

Mr. McGovern: In view of these allegations which strike at the roots of democracy, would not the Prime Minister consider the setting up of a commission to investigate the suggestions and send men from this country to do that?

Sir R. Ross: Is not the right how Gentleman aware that the all-party meeting to which he alludes, originated at the suggestion and instigation of the Prime Minister of Eire; and is this interference with United Kingdom elections to be allowed to other foreign countries or is it one of the privileges that Eire alone enjoys?

The Prime Minister: The hon. Member will remember the statement which I made with regard to the position of Eire, which was not classified as a foreign country.

Mr. Gallacher: is the Prime Minister aware that there has been gross, deliberate and organized opposition of the most hooligan character directed against the hon. Member for West Belfast (Mr. J. Beattie), a Member of this House, by the supporters of the Stormont Government, and in view of the fact that we legally recognise the Government of the Irish Republic, have they not a right to interfere in Irish affairs?

Mr. Stanley: Are we now to understand from the Prime Minister's last answer that when he said he was not going to treat the Government of Eire as a Government of a foreign country he meant by that that he was going to allow them to interfere in our elections?

The Prime Minister: I implied nothing of the sort. I was correcting the hon. Member for Londonderry (Sir R. Ross) on a question of fact.

Professor Savory: I wish to give notice that in view of the unsatisfactory answers


of the Prime Minister, I shall draw attention to this matter on the Motion for the Adjournment as soon as possible.

Oral Answers to Questions — CENTRAL OFFICE OF INFORMATION (REGIONAL OFFICER)

Mr. Boyd-Carpenter: asked the Lord President of the Council whether he is aware that Mr. Maurice Hackett, chief regional officer for London and South-Eastern Area, Central Office of Information, attended a meeting at the House of Commons on 29th November, 1948, whose object was the extension of the activities of the Labour League of Youth; and whether he has authorised such participation in party activities or what action he proposes to take.

The Lord President of the Council (Mr. Herbert Morrison): Yes, Sir, I am aware that Mr. Hackett was present at the gathering to which the hon. Member refers. He was invited as a former member of the League and its chairman from 1926 to 1929, and regarded the occasion merely as an opportunity to meet old friends. I am informed that he does not now engage in any party political activity.

Mr. Boyd-Carpenter: In view of the earlier part of the Lord President's answer, is he aware that this meeting was described in advance in the organ of the Labour Party League of Youth as being one to rally support among old friends for the Labour Party's plan for a new and extended youth organisation; and in view of the desirability, if the C.O.I. is to continue at all, of its officers being free even of suspicion of party bias, will not the right hon. Gentleman indicate that such conduct is inconsistent with high office in the C.O.I.?

Mr. Morrison: I think the hon. Gentleman is making too much fuss about this matter. This was a social gathering. As far as I know, Mr. Hackett took no active part in any political proceedings. He was quite prominent in this League many years ago. It was not unnatural that he should go to meet old friends. I think that the hon. Member is making much too heavy weather about it. In any case, I did not originally appoint Mr. Hackett to the Ministry of Information. He was originally appointed to the Ministry of Information by Mr. Duff Cooper.

Mr. Stanley: What is the relevance of that last remark? Surely, even if he had been appointed by other people, the right hon. Gentleman, while he is in charge, remains responsible now for his conduct, and does the right hon. Gentleman seriously think that it was a good thing for this public official, who must depend upon the good will of all parties to make his work a success, to attend a meeting of this character?

Mr. Morrison: The relevance of my last remark is that it was made in order to protect us from accusations and to inform by hon. Friends of the possibility of accusations that the Government fill these positions for political reasons. That is why I said it, and it is very necessary to make this clear in view of the slanders being spread up and down the country. On the last point, I really think that the right hon. Gentleman is making very heavy weather about this. It was purely a social occasion. Mr. Hackett undertook no political activity and I really think that this is running it very hard.

Miss Bacon: Is my right hon. Friend aware that the meeting as described by the hon. Gentleman did not in fact take place and that this was a purely social function with old members of the Labour Party League of Youth?

Mr. Godfrey Nicholson: Will the right hon. Gentleman go so far as to declare that he still adheres to the policy that no civil servant should take part in party politics?

Mr. Morrison: Yes, Sir. He should take no active part in party politics. That applies to all civil servants of all political opinions.

Oral Answers to Questions — SEVERN BARRAGE SCHEME (MODEL)

Mr. Peter Freeman: asked the Lord President of the Council whether the tidal model for the Severn Barrage scheme made by the department of engineering of Manchester University in 1926–30 is being used in connection with recent researches.

Mr. H. Morrison: No, Sir. The Manchester University tidal model for the Severn Barrage scheme was dismantled some years ago when the researches for which it was constructed were completed.

Mr. Freeman: Does not my right hon. Friend agree that the information from this model would be of value to the committee; and, in view of the fact that it is two years since the new committee was appointed, can he say why there has been so much delay, and can he tell us when we shall get a report on the scheme?

Mr. Morrison: We shall get the report as soon as the work is completed. I understand that all the information which resulted from the Manchester University tidal model is still available, and that they have been constructing a better and larger type of model which will be more effective for the purposes in hand.

Oral Answers to Questions — HYBRID BILLS (PROCEDURE)

Mr. Benson: asked the Lord President of the Council whether he will state the Government's attitude to the Report from the Select Committee on Hybrid Bills (Procedure in Committee).

Mr. H. Morrison: Yes, Sir. The Government have considered the Report and agree with the recommendations of the Select Committee, subject to one minor modification. The Select Committee's last recommendation is that Hybrid Bills against which no petition has been lodged should be committed to a Committee of the Whole House, without being sent in the first instance to a Select Committee. The Government agree that such Bills need not be referred to a Select Committee, but think the House should have the option either of taking them in Committee of the Whole House or of referring them to a Standing Committee. The Government will give the House an early opportunity to reach a decision on the Select Committee's Report and the Government's proposed modification.

Mr. Benson: While thanking the right hon. Gentleman for his answer, which I am sure will gratify the Committee, may I ask him if it is not a fact that the minor modification to which he refers is a modification only of the summary of recommendations and not a modification of the body of the Report itself?

Mr. Morrison: I am much obliged to my hon. Friend. I rather think he is right about that.

Mr. Lennox-Boyd: While the modification announced is, in part, what the two Conservative Members of the Committee recommended—and for that we are naturally grateful—as the Report was not uanimous and certainly involves an alteration in the procedure of Select Committees, and in our view in one particular still further limits the defence of the liberty of the subject, will the right hon. Gentleman have this Report debated in the House before any action is taken on it?

Mr. Morrison: Yes, Sir. There will be a Motion on the Order Paper, and that, of course, will be debatable if the House should so wish.

Oral Answers to Questions — FOREIGN TRAVEL ALLOWANCE

Mr. Blackburn: asked the Chancellor of the Exchequer whether he will now increase the foreign travel allowance for visits to those countries which have a substantial adverse balance of trade with this country, including France and Greece.

The Economic Secretary to the Treasury (Mr. Douglas Jay): The new tourist year begins on 1st May next, and I shall be making a statement about next year's travel allowances nearer to that date.

Mr. Blackburn: Will the Minister bear in mind that people in this country like to plan their holidays early and that they want to know now whether it is likely that there will be an increase in the travel allowance to France and other countries about which there seems to be no economic difficulty whatever?

Mr. Jay: Yes, Sir. We are very anxious to make a statement at the earliest possible date, but we are in communication with several other countries at this moment.

Mr. Keeling: Is the only reason against this our agreement with Switzerland that we will not do it?

Mr. Jay: The chief difficulty arises from the fact that we must not spend gold or dollars on tourism which we could otherwise spend on food. Subject to that limitation, we should like to have the maximum facilities for tourism.

Colonel J. R. H. Hutchison: Will the Minister bear in mind that money spent in this way tends also to attract visitors to this country from France or from whichever country to which it applies, and so has a double advantage?

Orders of the Day — AMERICAN AID AND EUROPEAN PAYMENTS (FINANCIAL PROVISIONS [MONEY]

Resolution reported:
That, for the purposes of any Act of the present Session to make certain provision of a financial nature in connection with the assistance furnished to the United Kingdom in pursuance of certain Acts of the Congress of the United States of America and any assistance furnished by or to the United Kingdom in pursuance of agreements entered into by members of the Organization for European Economic Co-operation, it is expedient to authorise such issues out of the Consolidated Fund to the Civil Contingencies Fund, such repayments to the Exchequer and such issues from the Consolidated Fund for the repayment of debt as result from any provision of the said Act of the present Session enabling temporary advances to be made from the Civil Contingencies Fund to any Infra-European Account opened under the said Act of the present Session and applying the provisions of section three of the Miscellaneous Financial Provisions Act, 1946, in relation to those temporary advances.

Resolution agreed to.

Orders of the Day — AMERICAN AID AND EUROPEAN PAYMENTS (FINANCIAL PROVISIONS) BILL

Considered in Committee.

[Major MILNER in the Chair]

CLAUSE 1.—(THE TWO TREASURY ACCOUNTS.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

3.31 p.m.

Mr. R. A. Butler: I have nothing of substance to raise on this Clause. I simply want to ask the Economic Secretary to the Treasury, or whoever will reply, whether the elaborate procedure under Subsection (2) for auditing the Account by the Comptroller and Auditor-General will come before Parliament; if he can give any indication of what the procedure will be, and whether the matter will be brought before the Public Accounts Committee or whether this House will give it direct consideration.

Mr. Peter Roberts: I want to raise the question of the "Intra-European Payments Account," which appears in Subsection (1, b), and I


should like to have some explanation from the Economic Secretary of how he expects this account to work. In his Second Reading speech the Chancellor of the Exchequer mentioned, but did not go into the details of the working of this account, and I think it is of vital importance that this Committee should have a clear understanding how it is going to work. It is important that in approaching this subject we should realise that we are dealing with the convertibility of currency, in other words, this account would be able to be used to balance accounts between one country and another, even beyond the various national agreements which may have been made between those countries.
The background of my argument is that this Bill, and this Clause particularly, depend for their benefit on whether one looks at the long-term or a short-term policy. I appreciate the short-term necessity of this type of assistance of currency control, but I am very doubtful of the long-term necessity for it. Therefore I should like to put this point to the Economic Secretary. The benefits which this system will give will be benefits derived from bilateral trading. With the help of this money the Government will be able to arrange agreements between one country and another, but these agreements will be on a bilateral basis, so that, if we are trading with France, we shall be able to export to France as much money as France in her turn is prepared to return to this country. I feel that the difficulty that we are up against is that, if we base our trading arrangements upon bilateral trading—and all these agreements are, in fact, based, so far as I can see, upon bilateral trading—we are not going to overcome the essential difficulty of the deficit of dollars with the Western Hemisphere.
This is the point which I wish to put to the Economic Secretary. These bilateral agreements, as I understand them under this scheme, are founded upon a 50–50 basis. If we refer to the White Paper, we see there that, with regard to the Western Hemisphere in 1952, there is going to be an overall deficit of 291 million dollars.

The Chairman: I think the hon. Gentleman is going far beyond the scope of Clause 1, which appears to be purely

a matter of machinery and relates to the opening of accounts. I do not think the question which he raises is at all appropriate at this stage.

Mr. Roberts: With great respect, Major Milner, I feel that it does, to this extent. So far as I understand it, and I am only asking for an explanation, these accounts are to be opened and, where trading is operated under bilateral agreements, in years of deficit a country may draw from that surplus from this account, and that is the point which I am trying to elucidate. So far as I can see, on a bilateral trading agreement, we are only going to deal with an exchange of goods between one country and another on an equal basis. The point I am trying to make is that the whole object of the scheme is that we shall get over our recovery programme by 1952. But, in that year, admittedly, we shall have a surplus on our balance of payments with the whole world, whereas there will be a deficit with the Western Hemisphere of 291 million dollars.
In other words, we shall be trying to trade on a bilateral trading system, and yet we shall have an export surplus with the European and non-sterling areas of something like 600 million dollars, despite a Western Hemisphere dollar deficit. That is the point which I wish the Economic Secretary to answer. It seems to me that the policy which he is pursuing in this Bill is trying to arrange for bilateral trading between this country and the sterling and European country areas on a 50–50 basis.

The Chairman: I am sorry, but I really think that the hon. Gentleman's remarks would have been far more appropriate on Second Reading. I cannot see how they can relate to the opening of two specific accounts, which is the specific matter referred to in Clause 1.

Mr. R. A. Butler: We have made an exhaustive study of this Bill, and we had envisaged that a Debate on the excellent lines which my hon. Friend has just initiated might take place on Clause 3, which deals with the Intra-European Payments Account, and not so much to the establishment of machinery. On Second Reading we did not go into details, saying that we would raise points in Committee, and I think they would be appropriate to Clause 3.

The Chairman: Without necessarily fully agreeing with the right hon. Gentleman, I think that Clause 3 would be a more appropriate part of the Bill on which to raise these wider issues.

Mr. Roberts: I bow to your Ruling, Major Milner, and I hope I may be fortunate enough to catch your eye when we come to that Clause. I did confine my argument to asking for an explanation of the working of this account, because, if this account is merely to be used for the payment of debts between one country and another on a bilateral trading basis, it will not affect the problem which I want to tackle. If he could give us some indication on that, it would help us when we come to Clause 3. At the moment, I should like some information as to how the account will work.

The Economic Secretary to the Treasury (Mr. Douglas Jay): The right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) asked me first for some elaboration of the machinery for the auditing of these accounts by the Comptroller and Auditor-General. The arrangement will be that the money paid out of the Special Account will go into the Exchequer. When it is spent, of course, it will be paid out of the Exchequer. The Comptroller and Auditor-General will then audit the payments made from the Exchequer in the case of those moneys. The matter will come before the Public Accounts Committee and the procedure will be the same as that for the accounting of any monies paid out of the Exchequer. That applies to the Special Account.
In the case of the Intra-European Payments Account, the money will, of course, not pass through the Exchequer, because this is money not spent ultimately by the British Government, but by the other Governments who exercise their drawing rights. Nevertheless, the Bill lays down that in that case, so far as the Comptroller and Auditor-General and the Public Accounts Committee are concerned, the procedure will be the same. It really amounts to the fact that Parliament will not have control over the spending of these monies in the sense that they are monies voted by this House, because, of course, the monies do not originate from taxation in this country, but from

the American Government, although there will be full accounting afterwards by the usual procedure showing how the money has in fact been spent. I think that explains briefly what the machinery is.
The hon. Member for Ecclesall (Mr. P. Roberts) put a rather more general question which I am not quite sure that I followed. He asked, I think, how the working of the Intra-European Payments Account was related to the various bilateral trade agreements being made between European countries at the present time. Of course, there is really no direct relation between the two. The Intra-European Payments Account is merely a piece of United Kingdom machinery. The account is held in London, and is not the account at Basle. It is the medium by which the Marshall Aid made available to other European countries through the United Kingdom is handed over to them.

Mr. P. Roberts: Handed over in sterling?

Mr. Jay: Yes, handed over in sterling. The actual way in which it works is that the sterling counterpart of the dollars which we get as conditional aid is paid into the Intra-European Payments Account in this country, and then, in turn, when the other countries which are members of O.E.E.C. exercise their drawing rights, the sterling in that account is paid over to those countries by the British Government. But there is no direct relation between the working of this account and the various trade agreements.

Mr. Roberts: Assuming that there is a debt between Italy and France, could the Italian Government draw on this account in order to pay France, or must they draw it between this country and Italy?

Mr. Jay: That would depend on whether in the agreement made at the beginning of the year for the working of conditional aid generally under the Intra-European Payments Agreement, drawing rights had been established by France in favour of Italy, or whatever it might be.

Mr. Roberts: Assuming they had?

Mr. Jay: Assuming they had, the drawings would be from some account in Italy by France.

Mr. Roberts: And not on this account?

Mr. Jay: No, the only people who can draw on the United Kingdom Intra-European Payments Account are the other O.E.E.C. countries for whom we agreed under the agreement of last summer to make drawing rights available. That is the whole significance of the account.

Mr. Roberts: Therefore, it does not help the problem of getting a free convertibility of currency; it cannot be used in that way at all?

Mr. Jay: This is a device to allow trade to go on in the meantime.

3.45 p.m.

Mr. Benson: Of course, the drawing rights are not normally convertible, but, assuming that France has drawing rights to the tune of 200 million dollars, and assuming she wanted gold for the goods which she bought from this country and sold to Portugal or Switzerland where gold is available, is there anything in the rules of trade that have been accepted which would prevent the siphoning of these drawing rights, which are essentially sterling drawing rights and limited to a particular country, in such a way that the other country could collect gold?

Mr. Jay: There is, of course, a general principle laid down and agreed to between all the O.E.E.C. countries that they will endeavour not to use gold for settlements in connection with intra-European trade. Unfortunately, we have not been able to carry that out in 100 per cent. of the cases, and, as the House knows, we are now making gold payments to Belgium and Switzerland, but that is a principle which we are attempting to carry out.

Question put, and agreed to.

Clause ordered to stand part of the Bill.

CLAUSE 2.—(THE SPECIAL ACCOUNT.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. David Eccles: This Clause deals with the Special Account, and I think it would be convenient if I

divided my questions about it into two sections, first, as to what money is paid in, and, secondly, how that money is paid out. The money paid into this Special Account is the sterling equivalent of 981 million dollars unconditional grant which we received from the United States plus the sterling equivalent of 30 million dollars which we receive in drawing rights in Belgium. Therefore we may anticipate that this account may be nourished with the equivalent of something like £250 million.
The details of exactly what payments rank for sterling equivalents are to be found in Article 4 of the Economic Co-operation Agreement, Cmd. 7469. Section 2 begins:
The Government of the United Kingdom will establish a special account in the Bank of England.
It then goes on to describe what shall be paid into that account. From paragraph (b) it appears that not only the equivalent of the dollar cost of the Marshall goods is to be paid into this account but also
any cost of processing, storing, transporting, repairing or other services incident thereto.
Therefore, if we have to pay dollar freight for any of these goods coming across the Atlantic, the equivalent of that freight must be paid into this Special Account. Can the Economic Secretary say what is the position of the shipping arrangements in regard to Marshall Aid? Is it still the case that 50 per cent. of these goods must be brought over in American bottoms, because it is clear that it would be cheaper and more in keeping with the general principles of the Havana Agreement if these goods were shipped in British or other ships which could quote lower freight rates? This is a very important question for everyone. If we want the co-operation of the Norwegians, who are now under pressure from the East, and are looking, I hope, towards the West, it is important that these Marshall Aid goods should come across the Atlantic in the ships which can carry them most cheaply. If that were done, it would, of course, reduce the amount paid into the Special Account in respect of dollar freight. That is my first question on, the paying-in side.
My second question relates to the equivalent of the Belgian drawings. We see from the published figures that His


Majesty's Government have been very quick to use up all their drawing rights from Belgium. This Special Account at the moment, I understand, has the equivalent of nine months of the total of the Belgian drawings which we are allowed to use at once. Could we hear what is the proposal about trade with Belgium now that the Special Account is credited with the equivalent of the drawings? Are any negotiations on foot to enable trade to continue?
I turn to Subsection (2), which covers the 5 per cent. which the United States Government have the right to use as they wish—5 per cent. of all the monies paid into this Special Account. That will come to something like £12 million in the course of the first year of Marshall Aid. The purposes for which that may be used are mentioned in paragraph 4 of Article IV of the main Agreement, but we have been told that this money can be used for the purpose of buying strategic raw materials and for stockpiling. Could the Economic Secretary tell us something about the stockpiling programme? How is it getting on?
Thirdly, Subsection (3) deals with the disposal out of the Special Account of the 95 per cent. of the monies paid, subject to the agreement of both Governments. If one looks at paragraph 6, Article 4, of the main Agreement, one finds that there are set out three purposes for which this money can be used. First of all, to stimulate productive activity in the United Kingdom. That would mean the investment of American money, the investment with the consent of the Americans of this £250 million or part of it in productive activity in the United Kingdom. The second purpose is the development of raw materials and the production of raw materials outside the United Kingdom. The third purpose is the retirement of public debt. I understand that the Chancellor is availing himself only of the third method of disposal, that is the effective retirement of public debt.
I think we on this side of the House will agree that that is the best way to use this money, but I must ask how the Chancellor proposes to assure the United States Government that public debt has been effectively retired when payments are made out of this Special Account. If the Treasury were to buy a block of Government securities with money out of this account and then those securities

were sold by one of the Government Departments, that would not be effective retirement of the public debt. I want to know what is the method by which we satisfy the Americans that we are carrying out that provision.

Mr. Jay: The hon. Member for Chippenham (Mr. Eccles) asked first about the provision that 50 per cent. of the goods furnished to Europe under E.R.P. have to be carried in United States ships. It is perfectly true that that was the original arrangement laid down by the American authorities. It has been enforced hitherto and it is in force at the moment; but as a matter of fact discussions are now taking place in Washington to see how far that should continue in the future. That discussion is in connection, of course, with the Bill which is about to be placed before the American Congress for the next year's appropriation. The hon. Member for Chippenham rightly said that from the European point of view the more goods which can be carried in European ships, whether British or Norwegian or others, the better for all of us.
Secondly, the hon. Member inquired about our transactions with Belgium under the Intra-European Payments Agreement and asked me how we proposed to act in the immediate future. It is quite true, as he said, that we have drawn a large proportion of the sums on which we had drawing rights under the original agreement with Belgium. Up to 26th January we had received from Belgium and put into the Special Account a sum of 22,500,000 dollars, which is a little less than the total sum available. It is perfectly true that we shall not have enough Belgian francs under that scheme to cover the deficit we have running at present with Belgium; this was made clear in the announcement made when we completed a short-term trade agreement with Belgium a week or two ago. We shall have to negotiate this matter when we come to decide the drawing rights to be made available under the scheme for the next annual period. We in the United Kingdom will have to attempt to see that we have drawing rights sufficient to cover our deficit with Belgium, but this is a matter which cannot be settled until then.
The hon. Member also asked about the stock-piling programme which the United States is entitled to finance out of the


5 per cent. of the monies in the Special Account. I cannot give him any great detail on that, but the United States authorities are anxious to make full use of that provision, and purchases are being made and no doubt will be made.
Finally, I was asked about the use of the 95 per cent., that is to say the bulk of the sterling in the Special Account. It has been used up to date almost entirely for the redemption of debt. We have actually used the sum of £82 million for the redemption of debt out of the sterling in the Special Account. The normal procedure, of course, would be to use that for retirement of short-term debt, for the redemption of Treasury Bills or Treasury Deposit Receipts. There is no difficulty in giving full details of that to the American E.C.A. authorities in London and satisfying them that it has been used for that purpose. We have not yet spent any of this money on any other purpose than debt redemption, although there are under discussion at the moment one or two possible projects, including one Colonial Development project, for which this method of finance might be suitable. I think I have dealt with all the hon. Member's questions.

Mr. R. A. Butler: We are anxious to be assured that all the terms of this Economic Co-operation Agreement are covered by this Bill and that is one of the objects of examining the Bill in detail. Will it be true to say, for example, that paragraph 7 of Article 4 of the Agreement itself, which deals with any unencumbered balance in the future, is covered by the final Subsection of Clause 2 which says:
If the Government of the United States of America consents that the Government of the United Kingdom should draw upon the Special Account for any purpose, the Special Account may be drawn upon accordingly.
This deals with the possibility that there may be an unencumbered balance on 30th June, 1952. That, of course, deals with a future contingency, and we very much hope there may be such a balance, but I do not know whether the terms of the Bill as drafted make provision for that sort of eventuality.
The only other point I have to raise in dealing with what I may say were very fair answers to my hon. Friend the Member for Chippenham is whether the Economic Secretary could describe in any

detail the Colonial project or any other project which would be included under paragraphs (a) and (b) on page 6 of the Agreement, whether it were expenditures for production of materials or expenditures on projects and programmes. I should be much obliged for further details on that point.

4.0 p.m.

Mr. Jay: In answer to the right hon. Gentleman's first question about Clause 2 (3); as I understand it, that Clause would give the necessary authority for the disposal of any final unencumbered balances. It gives authority for the Government of the United Kingdom to make use of amounts in the Account in any way which is agreed with the Government of the United States; and that, I think, would cover that future eventuality. I am afraid I cannot give much detail of Colonial projects in the future on which this money may be spent; but one of the types of expenditure we have considered and are considering is, for instance, the sending of technical experts, and medical experts, and so on, to the Colonies in connection with development projects. It is possible that some money may be spent in the near future for that purpose. The right hon. Gentleman will remember that there has been an offer of technical assistance from the United States, which we are considering at the moment.

Mr. Oliver Stanley: Would the hon. Gentleman answer one question about the 5 per cent. for stock piling? Do the British Government act as agents for the United States Government in acquiring the necessary stock, or do the American Government simply buy what they like, where they like, within the sterling area, and simply draw on the 5 per cent. available to them?

Mr. Jay: The normal procedure is, I think, that sterling is made available to the American authorities, and they purchase the goods they need; but they do it by agreement with the United Kingdom Government, and in such a way as to cause the least disturbance to trade and our own need for materials. It would not be true to say we acted as their agents in normal cases.

Question put, and agreed to.

Clause ordered to stand part of the Bill.

CLAUSE 3.—(THE INTRA-EUROPEAN PAYMENTS ACCOUNT.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. R. A. Butler: I think this Clause raises the main issues of this Bill, and we would not be ready to agree to this Clause without some further explanation from the Economic Secretary in answer to some of our doubts and anxieties. It is possible to use highly technical language in dealing with these matters. I may, perhaps, be forgiven if I go to the other extreme and use as simple language as possible. What this Clause appears to make certain is that there will be a rigid intra-payments system—we are discussing the Intra-European Payments Account—which will, in fact, impose itself on the terms of trade and be the master of the terms of trade, instead of the alternative of a monetary system as the servant of trade. We understand how such a system has to be introduced, but there is no doubt that it assumes in this Bill, and as far as we can study the matter, a great rigidity.
Therefore, we want to ask the Government, in the first place, whether they are satisfied that this is quite the right way to achieve the greater development of intra-European trade and expansion of world trade, or whether they are not depending too much on the bilateral system, whether, in fact, they are not introducing so much rigidity that they will defeat their own ends. The Economic Secretary would go some way to alleviate our anxieties if he said that there are proposals—we may discuss them in more detail on Clause 5—for an amendment of the scheme at a later date which would render it more flexible and more adjusted to the real needs of trade.
The second criticism I should like to make is that it would appear that this system gives no effective incentive to debtor countries. It would appear to be the case that the debtor countries have no incentive really to improve their position, because, to put it bluntly, they know what they are going to get under the grants which are coming to them. We feel also that what has been described as the "small Marshall plan" has not in it the same element of efficient supervision and control that the main plan carries with it. It is rather an extraordinary thing that the machinery by which the

plan is carried out should include in it less supervision, control, and incentive to do better, than the main plan itself. Perhaps, the hon. Gentleman will give us some answer on that which will give us some satisfaction.
An extreme example would be of a country's using its drawing rights even if it meant paying a higher price for imports. That would be going against all our principles of making trade better, and of making it flow more easily in Europe. Then I want to ask the hon. Gentleman what happens if creditor countries do not exercise their drawing rights. I realise that this matter is set down in the Economic Co-operation Agreement, in Article XVII, and that we have an opportunity of understanding that matter by studying the terms of the Co-operation Agreement itself; but I would value from him some more detailed example of how he thinks it is to work out.
Then I want to revert to something I first put to the Government in September of last year, and which we raised again on Second Reading. Where are the sums paid out of the Intra-European Payments Account to debtor countries to be expended, and on what are they to be expended? We have had so far only some preliminary answers on this point. If these sums are to be expended in the sterling area, we want to know upon what they are to be expended. I should like to support what my hon. Friend the Member for Chippenham (Mr. Eccles) said in the Second Reading Debate, that we do not think that the Government have approached this whole problem sufficiently from the angle of the sterling area itself, but seem to have approached the problem of settling the intra-European payments from the angle of this country alone—as I myself described it—turning it into a sort of autarchic economy, rather than approaching it from the angle of the sterling area itself and our own interest.
If the hon. Gentleman will carry further the arguments the Chancellor of the Exchequer attempted to give about where this money can be spent, and on what it will be spent, he will be helping us. If it can be spent only in the sterling area, as the Government have implied, what arrangements are there for making the limitation effective? I do not believe


these sums will be spent only in the sterling area. The Government have implied this, and, perhaps, the hon. Gentleman could take the matter a little further and make his answer more explicit. If, in fact, they are to be spent in the sterling area, what limitations are to be imposed to ensure the expenditure is there made?
I said that we should be able on Clause 5 to carry a little farther our investigations into the future and into the possible amendment of the Intra-European Payments Agreement, but I think it is essential for us to look further ahead than the Government appear to have done so far in this matter, because our whole object in receiving Marshall Aid is to improve European trade and to develop intra-European trade. If we adhere to a rigid system of this sort we shall suddenly find ourselves at the end of Marshall Aid with a rigid system which does not suit the needs of the moment.
Therefore, I hope we shall hear from the Government that it is intended that there shall be amendments not only in the system of intra-European payments but also in the machinery of O.E.E.C. itself. We have seen a certain amount in the Press on the subject of the possible amendment of the O.E.E.C. machinery, which is not in itself entirely satisfactory—leaving aside the obvious tributes we should like to pay to the many personalities who have introduced themselves into the picture, and whose initiative has helped us to launch the scheme. Leaving that aside, can the hon. Gentleman give us any particulars of the possible amendment of the O.E.E.C. machinery itself, and can he tell us whether he intends to make the intra-European payments scheme rather more flexible in the immediate future?
In this connection, the Government could help us also if they would reassure us that the overlapping of economic organisations in Europe is not to be more intense than it is at the present moment. We understand that the Government are intending to unite all their efforts at achieving the economic recovery of Europe within the O.E.E.C. machinery. It is, therefore, important that this machinery should be flexible to the maximum degree and that in the period at

the end of Marshall Aid we should be quite satisfied that it is possible to have a scheme which will work in a more flexible manner.
The last point which I wish to put to the hon. Gentleman is a technical point to which, if he keeps up his batting average today, he will give us an immediate answer. That is to ask him if any Category 2 compensation has yet been accepted. Category 2 compensation is that in which the debts can be switched from one creditor to another. Will he tell us whether any such arrangement has been made because, according to our researches, none has been made hitherto.
I conclude, in introducing a discussion on this Clause, by saying that the present system, however necessary it may have been to start the scheme off, is in our view too rigid. It encourages to too great an extent bilateral as opposed to multilateral European trade. It does not give an incentive to countries to build up their surpluses in mutual trade, and it seeks to give too big an encouragement to debtor countries to sit back and say that things are looking pretty and not to be prepared to put forward their best efforts. There seems to us to be too detailed a form of planning really to encourage incentive and development in the trade of Europe. We trust that the Government will be able to reassure us about these matters before we agree to the passage of this Clause.

Mr. Benson: I think that the right hon. Member for Saffron Walden (Mr. R. A. Butler) is asking a good deal of the Economic Secretary to outline future reforms of the machinery of intra-European payments, as the machinery has only just been set up. We surely must proceed on a basis of trial and error. There will be flexibility, I think inevitably, in that the intra-European drawing rights are fixed only for 12 months and will have to be reconsidered every year. I have no doubt that with reconsideration year by year such experience as not only this country but the other European countries have had will enable them to increase the efficiency of their machinery. The fact that our drawing rights are fixed only for 12 months surely gives O.E.E.C.—not merely this country—the power to put some pressure upon those debtors who do not appear to be making any real effort to balance their overseas payments account.
With regard to multilateral trading, it is very nice to notice the complete conversion of the opposition to multilateral trade which, of course, is our ideal. But our experience of the attempt to make sterling multilateral currency in 1947 surely does not encourage us to go too rapidly in that direction, even on the very much smaller scale of intra-European drawing rights. It is, as I suggested on an earlier Clause, theoreticaly possible that the 200 million dollars worth of sterling which has been granted under the intra-European agreement with France can be used to purchase materials in this country to be sold either to Switzerland for gold or to the United States for dollars. I fancy that there has been in the past, prior to Marshall Aid, an attempt on the part of some European countries to purchase in this country for sterling and soft currency materials which were very valuable to us as dollar earners, and to trade them to dollar countries, the result being that we got soft currency and the purchasing country got dollars. That is still possible, I think, under these drawing rights.
I hope that the Economic Secretary, although I am quite sure that he like myself and, I think, everybody on this side of the House is strongly in favour of a return to multilateral trade as rapidly as we can, will see that these drawings are not used to our detriment to the extent that they enable the recipient countries to use these drawing rights indirectly to earn dollars or gold.

4.15 p.m.

Mr. P. Roberts: I feel after listening to the Debate, that this Clause does not go as far as I should like it to go. Questions which I put to the Economic Secretary earlier verifies my opinion. As has been already mentioned, I fear that we shall get into a position where our trade with other European countries will be so rigid and fixed that we shall not be able to deal with the dollar deficit from the Western Hemisphere. I would quote what the Chancellor of the Exchequer said the other day when he was putting the problem and, I think, was suggesting an answer. I thought that this might have been the answer that he was suggesting, but it appears that it is not. He said:
Just as the European countries must plan their long-term programmes to overcome the dollar deficit by increased production, so they

must devise ways of getting rid of the persistent deficits in the payments between one European country and another."—[OFFICIAL REPORT, 27th January, 1949; Vol. 460, c. 1116–7.]
He did not go on to say how we were going to get rid of these "persistent deficits." I had hoped that through these drawings, if they had been made flexible, it might have been possible to achieve that result.
The great danger which I see is that if we go on trading in the way we are, exporting to France or to Italy merely the amounts which they are prepared to send back to us, we are faced in 1952 with this position: We have to export a surplus of 600 million dollars to Europe and the other sterling and non-sterling countries in the hope that the surplus will get to America in order to correct the deficit of 291 million dollars which we shall otherwise have to meet, although, at the end of 1952, we shall have an overall balance which will depend upon the surplus exports of those countries which are the non-dollar countries. If that is so, I fail to see from the point of view, for instance, of the exporters of Sheffield and Yorkshire that in facing an export surplus of 600 million dollars with no sterling to pay for them we shall have to accept foreign currency. I cannot see traders at the moment being prepared to accept francs if France was the country concerned.
The hon. Member for Chesterfield (Mr. Benson) mentioned the question of convertibility and what happened to the previous Chancellor of the Exchequer. There, of course, convertibility was allowed at fixed rates so that money went from London because a better rate could be obtained for a similar asset elsewhere. It seems to me obvious that unless there is fluctuation of currency which can be a guide we are going to get into this fixed state of trade the fear of which my right hon. Friend mentioned.
I should like to ask one or two questions of the Economic Secretary because we have not enough evidence upon which to make up our minds on this problem. I know that in Tangier at the moment there is what is termed a free market where the dollar is quoted in relation to the pound. Is it possible to get any idea of what would at the moment be the free exchange if all restrictions were taken off between the dollar and the £?


I am not now quoting the rate which could be got for the £ in New York, because obviously that entails having to bring the proceeds back across the Atlantic and into this country, risking going to prison in the process. However, I think we ought to have some indication from the Economic Secretary of what he considers the position would be if in this account we were allowed some form of flexibility to start with.
A possibility is that we might be able to have some form of flexible convertibility within these drawings which would be an indication of the way future currency purchases might be made. Unless something of this sort happens I believe that the whole of this scheme will fail. In other words, we have not found the solution for which the Chancellor said we should look. I am particularly worried about this agreement into which we are now entering, particularly the agreement with regard to the drawings from one country to another. As far as I could understand the Economic Secretary when I questioned him, it is only drawing on a sterling basis, and there is no chance of moving those currencies within the European organisation. If that practice is followed we shall find that, with the best will in the world, we shall not be able to get the surplus export necessary to balance our imports and exports with the Western Hemisphere by 1952. Therefore, I feel that at this stage I cannot support the Government on this Clause, because I believe that in the long run it will lead us into greater difficulties.

Mr. Eccles: I agree with my hon. Friend the Member for Ecclesall (Mr. P. Roberts) that there is a basic disequilibrium in trade in Europe today, and we ought to look at this intra-European payments system as a step towards overcoming the obstacles. I do not, however, agree with him that we could overcome them by having fluctuating exchange rates. Something very much more drastic than that has to be done. I should like to make my observations about this Clause in the same form as I did on a previous Clause: namely, to discuss first what is paid into the account, and then how it gets paid out.
I am dissatisfied with this drawing rights system, and I very much hope that

it will be drastically amended in the second year of Marshall Aid. As far as I can ascertain, the drawing rights which govern the amount of money paid into this account were the result of adding together very hasty guesses at the import surpluses of the Marshall Aid countries. Naturally enough, in the short time available the countries who thought they might get some conditional aid of this kind pitched their import surpluses very high; probably the United Kingdom was, as is usual, far and away the most honest in the statistical calculations, and ours is very likely the only calculation that bears any relation to reality.
One of the conditions which should have been taken into consideration when calculating what would be the deficit of any of these countries was the ability of that country to earn foreign exchange by normal trade. That is to say, the figure for the drawing rights that we have given to France, for example, which constitute more than half the amount of money going into this account, should not have been struck until after we had taken into account all the various ways in which the French could earn sterling. Indeed, the Chancellor himself said on Second Reading that part of the whole system is adherence to certain rules of commercial practice, and, to use his own words:
creditor countries should be as liberal as they reasonably could in their import policy.
Well, of course, that policy would be to our advantage in order to cut down the size of the drawing rights that we have to give to a country like France. We all know that we have not been as liberal as we might have been, either in taking goods from France or in the travel allowances to British tourists going to France, and at Question time today I was glad to hear the Economic Secretary say that this matter was under consideration. But it must be absurd to put up in this country for the benefit of France free sterling which France is perfectly willing and able to earn. I hope that next year some changes will be made in that direction.
The Chancellor also said:
Some drawing rights, almost certainly, will not be used."—[OFFICIAL REPORT, 27th January, 1949; Vol. 460, cc. 1115 &amp; 1117.]
That is evidence, of course, of the miscalculation of the import surpluses at the


time when this system was established. As my right hon. Friend has already said, we want to know whether we should lose any unconditional dollars if one of the countries to whom we have given drawing rights does not exercise them. I have in mind Italy particularly. Now, no payment ought to be made out of this account if the country to whom the drawing rights have been given has not used the available sterling that it has in balances in London obtained by other means.
I think it is necessary to show to the Committee how it is that a payment is made out of this Intra-European Account in order that I may explain this matter intelligibly. The first operations that take place when compensations are made each month between the Marshall Aid countries are Category 1 compensations, which are perfectly simple, since no new balances are created. When the Bank of International Settlements, whose duty it is to collect all this information, sees how many Category 1 compensations it can make, it then proposes to the Marshall Aid countries Category 2 compensations. My right hon. Friend asked about these. I believe it to be a fact that not a single Category 2 compensation has gone through; that obstacles have been put in the way of every proposal so far made. But we want some accurate information about that.
After Category 2 compensations have been turned down there remain certain deficits and credits. At that point the drawing rights come in, and the debtor countries are allowed to take money out of this Intra-European Account. But the Committee will see that it is of first-class importance to His Majesty's Government that before any of this free sterling is drawn out of this account the countries concerned shall have used up their abnormal sterling balances. There is provision for this in Article 6 of the Agreement for Intra-European Payments and Compensations, which reads:
Each Contracting Party undertakes not to cause abnormal balances in the currencies of other Contracting Parties to be held by banks other than central banks or otherwise to place such balances so that they will not be available for the purpose of compensations.
Can we know whether the Italians have tucked away a lot of sterling that they have been earning by their export trade on which we cannot get our hands? It

must be proved that there is no sterling that can properly be used for the drawing rights made available.
4.30 p.m.
As part of this whole system, we have agreed that by the equivalent of some 209 million dollars, sterling balances in London shall be reduced. We have never had details of those 209 million dollars of sterling balances. Are we quite certain that none of those countries, to whom we have given drawings, is holding either in its old sterling balances or sterling which it may be earning by its current trade, money which could be used to make the payments for the goods which it wishes to buy in the sterling area? It would be wrong to provide new money until the old balances have been drawn down. What is the American view about this? Americans used to be rather difficult to deal with about these sterling balances. Could the Economic Secretary tell us whether the American Government today fully realises that it is far better for us to reduce sterling balances than to give drawing rights so that we may get rid of these sterling balances which we have here?
I want to take up a point which was made by my hon. Friend the Member for Ecclesall (Mr. P. Roberts). We feel that some extra effort towards transferability in Europe should be made. We feel that this is a very rigid system, and it is going to impose a trade upon Europe which is tied up to what is purely temporary—that is Marshall Aid. It is very desirable that before 1952 European payments should become more flexible. The hon. Member for Chesterfield (Mr. Benson) rightly reminded us of the fiasco of convertibility in 1947. I do not doubt that both in the Treasury in Whitehall and in Washington the memory of what the Chancellor of the Exchequer did dies very hard, and that we are now over-timid because he was over-rash.

Mr. Benson: It is not a question of the rashness of the Chancellor of the Exchequer at the time. The point was that convertibility was forced upon us by the Loan Agreement. When the world knew that sterling was convertible they re-converted into dollars in every possible conceivable way. It had nothing to do with the Chancellor of the Exchequer.

Mr. Eccles: The hon. Gentleman is completely wrong. He ought to know that


the Americans came to the Chancellor at that time on several occasions in April and May and warned him that this would happen if he went on with it. He took no notice whatever.

The Deputy-Chairman (Mr. Bowles): What the hon. Gentleman is saying has got very little to do with the Clause and has nothing to do with what we are dealing with now.

Mr. Eccles: I beg your pardon, Mr. Bowles, but I was led away by the remarks of the hon. Gentleman opposite. I return to the question—can we make these drawing rights more transferable? They can only be used for the currency in which they are given, but I assume they can be used to pay debts in those countries with which we have the transferable sterling system as well as those in the sterling area. Could the Economic Secretary give us some hope that more countries will be brought into the transferable account system? There is Denmark, for instance. We want to widen the use of sterling as much as we possibly can.
I should like to go even a little further. I know that His Majesty's Government have been the chief opponents of making these rights transferable, because they feared that sooner or later sterling would get round to Belgium and Switzerland and entail gold payments. Could the Economic Secretary give us any kind of estimate of what is the risk involved? How much gold would we stand to lose, because the expansion of trade and the strengthening of sterling everywhere within the Marshall countries to make sterling transferable is an enormous question on one side, but on the other is it outweighed by the prospective loss of gold? I quite agree we should not wish to finance the holiday of every European in Switzerland. I should not want His Majesty's Government to have to find the foreign exchange for that sort of thing, but, with appropriate safeguards, a few more risks in the direction of freeing the currencies of Europe surely would be worth taking. Some further remarks on the same subject would be better raised on Clause 5, and I therefore leave Clause 3 at that point.

Sir Arthur Salter: I only want to say a word or two in

support of one point made by my hon. Friend the Member for Chippenham (Mr. Eccles). It is of extreme importance that in this inter-European payments scheme we should behave as we always say we wish a creditor country should behave. As the Chancellor of the Exchequer said the other day, this is a little Marshall scheme within the Marshall countries, and within this little scheme we are, of course, in the same relationship to a country like France as America is to us in the general world system. This is of great importance, because when the temporary aid of the Marshall Plan has come to an end, it will make a very great difference to the prosperity of the world, and in particular of a country with an economy like our own, whether the new equilibrium is on a low level or on a high level of international trade. The difference will depend upon whether the burden of adjustments falls, in fact, solely upon the deficiency countries or is lightened by the policy of the creditor countries.
We, of course, hope that to the utmost possible extent the surplus countries like America will facilitate imports from deficit countries. And the conduct we expect and hope from America on a larger scale to some extent at a later date, is now our duty within the Marshall Plan and Inter-European Payments Arrangements to show to these European countries like France, who are in deficit with us. I cannot see on what ground it is our interest or it is reasonable for us to refuse what France can give to our citizens in return for the sterling we supply her. Why should we insist that she shall take the sterling without giving in return either services or goods. Obviously, France not only could but would like to supply us for example, with tourist facilities on a much more liberal scale than is now allowed, and obviously she would also like to supply us with goods which we should quite rightly refuse to buy if their country of origin were a dollar country and we could only buy them with dollars.
Why is it that we prefer to give the money rather than accept a return for it in services rendered? It may perhaps be said, first, that if we refuse to take those services or goods, France will accommodate her economy to the production of goods we need more than what we are now refusing to receive. Well, the extent


to which that argument can be pushed, in regard to persons, for example, who run the hotel industry of France, or the people who are working in the vineyards, is obviously rather limited. The only other reason I can think of is that it might involve differential treatment of some of the Marshall countries. Obviously there are Marshall countries in relation to whom we are in deficit and not surplus. The application of this principle might well therefore involve that tourists allowances should be different in regard to a country to whom we are in deficit from what they would be in regard to a country like France, where we are in a surplus position. But this carries its own justification with it.
In all the arrangements that have been made in the last few years in regard to America and the dollar world, this distinction has always been maintained as, at any rate, one which should be applied and observed during this period of transition. Differential treatment is justified in cases where there is a serious fundamental disequilibrium in the balance of payments, as it would not be in cases where the relationship is of countries that are in equilibrium. Surely, if we cannot give greater facilities for the acceptance of services or goods from all the Marshall countries, it is best to make that distinction and to accept goods and services where we are in a surplus position in regard to the providing country. I therefore strongly support the argument of my hon. Friend the Member for Chippenham (Mr. Eccles).

Mr. Boothby: Having only just come back from France, I should like to put one point to the Economic Secretary. I found over there considerable disquiet about what was alleged to be the nationalistic outlook of our original British plan. They say it was a purely British plan which bore no relationship to the requirements of the Continent. I think that argument can be answered to a very considerable extent, but it is an argument which exists over there. It was rather a pity that the plan should have broken down in the way it did. I think there is also a realisation that we have every justification on economic grounds, having regard to the plan for the economic integration of Europe, for not taking a considerably greater number of French

goods than we are about to do, or say that we are going to do.
As the right hon. Member for Oxford University (Sir A. Salter) has just said, we are a surplus country in relation to France. The prevailing view in France is—something should be said about this because it is doing some psychological damage at the present time—that we are disinclined to take French goods not only on economic grounds, for which we have every justification, but on moral grounds, because somehow or other our Chancellor of the Exchequer disapproves of wine and tourists, and generally of enjoyment in any but the most rarefied forms.

Mr. S. N. Evans: May we have a definition of "rarefied forms"?

Mr. Boothby: I will leave that to the hon. Gentleman to find out for himself. Usually we call it an austere form of enjoyment. What the right hon. Gentleman says is definitely true. There are even rumours that we have been bringing pressure to bear upon the French to plough up the vineyards of Burgundy and Bordeaux and to turn them over to wheat and linseed. I am sure that that would be an outrage and contrary to any civilized conduct. There is only one trouble with wine at the present time; it is too expensive. The remedy for that is very largely in the hands of the people of this country and I shall have something to say about that later.
I can assure the Economic Secretary that there is widespread feeling in France that we are refusing to take goods that the people of this country would like and which the French would like to send us at the moment. They feel that although we are a surplus country we are—I might use a very forceful expression—pigheaded in our determination to set an example of rigid austerity to the Continent. There is an impression that we think that if we bought a little more wine, or if we went so far on the road to ruin as to buy a little more scent, we would encourage the French people to believe that we were relaxing our rigid programme of austerity. I should like the hon. Gentleman to say a few words on this subject from that angle. If he thinks that the French are not saying these things he is mistaken. They are saying them in large numbers and very


forcefully, and that is not doing us any good.

4.45 p.m.

Mr. Spearman: I support the plea put forward so ably by my right hon. Friend the Member for Oxford University (Sir A. Salter) that we should take the widest and the boldest view we can in regard to trade. We are forced in this case to be bold and imaginative. To be overcautious would mean that we should be bound to fail. I think I am right in saying that if we were to pay for the amount of imports we had before the war, and if world trade were to be at the level it, was in 1938, we should have to do half the total world trade. If we are going to consider ourselves in isolation, we are bound to starve through taking an ever-larger slice of an ever-dwindling cake. We surely must approach this matter with a degree of boldness and imagination and think about improving world trade, and European trade in particular, in a bold and generous manner.

Mr. Charles Williams: I support many of the things which have been said by my hon. Friends who have just spoken. One of the things which is doing more harm than good and helping to "dismalise" this country and to discourage trade is the appalling idea that the Chancellor of the Exchequer has on austerity. That is doing a great deal of injury to the nation as a whole. He is not really stopping luxury consumption, but is trying to stop certain forms of consumption of which he does not happen to approve. My hon. Friends have put in an appeal for things like scent and wine. I have no objection to those articles whatever. They would do a great deal of good. I am not sure that we should not have a better Chancellor of the Exchequer if, on occasion, he had a glass of something more substantial that would humanise him—

The Deputy-Chairman: The hon. Gentleman should confine his remarks to the matter before the Committee. He must not pursue his present line.

Mr. Williams: I certainly would not dream of pursuing that point. I was

merely trying to refer to something which could be usefully imported.

Mr. Beverley Baxter: On a point of Order. If the personal habits of a Minister are such that their influence is felt in the broader policies, could we not argue from the broader policies to the personal habits of the Minister?

The Deputy-Chairman: We are talking about intra-European payments. That is a very much more restricted field of debate.

Mr. Williams: Thank you very much, Mr. Bowles, for your kind help. I was not attacking the Chancellor of the Exchequer. I was only saying I thought he might be improved.

The Deputy-Chairman: That would be as much out of Order as if the hon. Gentleman were attacking him.

Mr. Williams: It is much too difficult to find anything good of the Chancellor for me to pursue that line. There are a lot of French things which could come into this country without competing with our own. There are one or two lines which I myself favour very much, but as a West Country man I must say that on one or two occasions in the last year there has been a great influx into this country of certain vegetable products from France, with almost disastrous effects. There is a great deal of difference between those products which compete with ours and those which do not. If, for example, the French swamped the whole of our herring industry, I believe that even my hon. Friend the Member for East Aberdeen (Mr. Boothby) would agree that something should be done. I simply put that point forward in a cautionary way, because I realise how difficult it is to keep the Government looking after our industries in this realm of wholesome food.

Mr. Boothby: It is quite inconceivable that the French could swamp the herring market. For my own part, I am not in the least afraid of that, or of their wines swamping the whisky industry.

Mr. Williams: I realise that the French are not likely to swamp the herring industry. My point was that if by some change of circumstances that were to come about in the case of herrings, we should hear a very different point of


view. I caution my hon. Friend to be a little careful on these matters. It is possible that he might find some particular Scots product being swamped by some French product in a way he would not like. My hon. Friend knows a lot but not all about Scotland. Scotland will develop in the future, and I hope that it always will. But I cannot go into that matter now.

Sir A. Salter: Is not the hon. Member for Torquay (Mr. C. Williams) rather afraid that American manufacturers may use the kind of argument which he is now using, and do so with much more serious effect upon us than the policy about which he is now addressing us?

Mr. Williams: Yes, but we are not here solely to put forward propositions which are absolutely safe. We must occasionally put forward some point of view of our own people, even if there is a danger in that point of view. I look upon the Americans as kindly and sensible people who will realise that we in this country have to look after our agricultural and market-gardening industries in the same way as they look after their industries. I have not the right hon. Gentleman's knowledge of America, but I believe that they respect us all the more if, occasionally, some of us state the point of view of our own countryside, as I am trying to do. I welcome the effect of this Measure in respect of goods coming from France and other countries, but if they are to compete with and, as was the case in the West Country this winter, even seriously injure some of our producers, there must be some limit in that direction. I welcome the Clause as a whole, and I hope that it will be of immense benefit to us, possibly even to the Chancellor of the Exchequer himself.

Mr. Jay: If I understood the speech of the hon. Member for Torquay (Mr. C. Williams) aright, it was one in support of this Clause. I am grateful to him for that. The right hon. Member for Saffron Walden (Mr. R. A. Butler) asked a number of searching questions. Perhaps I might answer the most technical one first. He asked me whether any Category 2 compensation under the Payments Agreement had yet been carried out. The answer is, "No." The right hon. Gentleman also asked, and

this was the main burden of the speeches of hon. Members opposite, whether we were satisfied that this arrangement of the Payments Agreement, which is given effect by this Clause, is likely to lead to greater multilateral trade in Europe and outside. We are at one with the spirit of most of what has been said this afternoon on the desirability of moving towards multilateral trade. I am not sure whether the hon. Member for East Aberdeen (Mr. Boothby) would support his friends in that, but there is not much division between the Government's view and what has been said by them.
The whole European recovery programme, we must remember, is a recovery programme and not a permanent system of international trade. In a number of respects it is temporary, though the O.E.E.C. may well go on. We agree that greater multilateral trade is the aim towards which we should move. Even during this temporary period we are attempting to get nearer to that system in two ways. The first way is by encouraging the maximum multilateral trade within the sterling area, where we have a system of multilateral trade and convertible currency. That applies to some extent also to the transferable account area, of which the hon. Member for Chippenham (Mr. Eccles) spoke. Secondly, we are trying to encourage a greater degree of such trade in Europe by this payments scheme, which I agree is a temporary scheme. The temporary arrangement represented by aid of this kind is certainly to some extent rigid, and is calculated perhaps to restrain trade. Had it been entirely a matter for the United Kingdom, we should have preferred at an earlier stage to argue in favour of a system by which the dollars in E.R.P. would have been handed over with each European country then being free to make use of them in whatever way they pleased. But we were only one of 20 parties to the bargain, including the United States, and after months of negotiation the Agreement emerged in a rather different fashion.
The right hon. Gentleman asked, as did the hon. Member for Chippenham, whether the payments scheme was not calculated to encourage debtors to continue being debtors and have a large deficit. If each year is looked at in isolation, one could argue that the larger one's


deficit the larger the grant one receives. That is obviously a danger of which we have all been conscious. The hon. Member for Chippenham said that the United Kingdom was perhaps more honest in estimating its surpluses and deficits than some countries had been in estimating them. It is not for me to say which countries have been most honest; but the test of time has shown up some of our estimates in a rather more favourable light than some other people's estimates.
We have to remember, however—and this is really the answer to the right hon. Gentleman—that each year the amount of dollars available to all the O.E.E.C. countries from the United States will be less. We have asked for a figure in the coming year 25 per cent. less than we are to receive in the present year. That is a hint to countries exercising drawing rights on us that they cannot expect to get as much as they had in the previous year. It is an assumption of the whole O.E.E.C. system that every country that has a deficit endeavours in all ways possible to diminish that deficit over the four-year period.
The right hon. Gentleman also asked what happens if the drawing rights are not exercised by the debtor countries during the year in question. That is one of the questions which is still undecided and which has to be further discussed in the O.E.E.C. All that is certain at present is that drawing rights are not automatically cancelled when the year comes to an end.
The right hon. Gentleman further asked, and the hon. Member for Chippenham touched upon the same point, what guarantee we had that sterling which was made available would be spent in the sterling area. The normal working of exchange control in the sterling area countries should ensure that the sterling made available is freely used only within the sterling area. Exchange control should ensure that it is not used outside. My hon. Friend the Member for Chesterfield (Mr. Benson) asked whether it might not happen that one of the countries receiving this sterling might buy goods and sell them for gold and dollars. That is a practice which did not originate with the Intra-European Payments Agreement. There have been cases

of that happening over the last two or three years. Our remedy for that would be to raise the matter with the country concerned within O.E.E.C. and to argue within the organisation that this was an action contrary to the spirit of the Agreement.
5.0 p.m.
Several hon. Members put forward the very familiar argument that it would be better for the United Kingdom to take more goods from France and to allow more tourist facilities for our own people going to France. It is probably not always realised that our visible exchange of goods with France is very nearly balanced. We are taking a very large volume of goods from France, including a great many not altogether essential products. The deficit arises from the purchase by France in the outside sterling area of wool, rubber and raw materials of that kind.

Sir A. Salter: Does it really matter whether one takes just invisible items or not? Is not the argument that I have put forward equally true, whatever is the origin of the deficit of France in relation to ourselves?

Mr. Jay: Yes, I agree. It does not matter in principle; but many people speak as though this country were buying very much less goods from France than France is buying from us, and that does not happen to be the case.
In answer to the hon. Member for East Aberdeen (Mr. Boothby), the idea that we are not taking goods from France because we think they are not the sort of goods which people in this country should have, is entirely untrue. There is no foundation whatever for that suggestion. So far as tourism is concerned, it is certainly our view that it would be sensible to make larger tourist allowances for countries with softer currencies than for other countries where it would cost us gold. But that is a view which is not held by various other O.E.E.C. countries, notably Switzerland, which attaches the utmost importance to the principle of most-favoured-nation treatment for tourism, and we have to take some account of the views of that country.

Mr. Boothby: Cannot the hon. Gentleman explain to the Swiss that the most-favoured-nation clause is an archaic


document of the 19th century, and no longer applies today?

Mr. Jay: I am sure the Swiss will read the hon. Gentleman's speech in the OFFICIAL REPORT. In spite of that, it remains true that over this period of recovery the European countries must, to some extent, adjust their productive capacity to the demands of the post-war period and to the present distribution of income. They cannot justify the claim that they should adhere to the precise production pattern of the 1920's and 1930's, which was based on a different distribution of income, and that everybody as a matter of right should be asked to buy whatever they choose to offer. We must make that clear as well.
The right hon. Member for Saffron Walden asked whether we were satisfied with the machinery of O.E.E.C., whether we were making proposals and whether we have had discussions to make it more flexible. We are not entirely satisfied, and discussions are now going on about the machinery of O.E.E.C. We agree that, now the Organisation has got to embark on the much bigger job of coordinating the various long-term programmes of the 19 countries, it will probably have to be strengthened. As the Committee know, my right hon. and learned Friend the Chancellor of the Exchequer will be going to Paris next week, partly for the purpose of taking part in those discussions, and indeed it is because he is preparing himself for that strenuous task that he is taking a few days' rest and is not here this afternoon.
The right hon. Gentleman also inquired about the overlapping of the various European economic organisations. It is true that we have the O.E.E.C. in Paris and we have the Economic Committee for Europe in Geneva. There has been a close liaison and working agreement between the secretariats of those two organisations, and although there may be some overlapping on paper, I do not think any serious harm has resulted. However, we unquestionably put our main emphasis and energy into the building up of the O.E.E.C. because it is the keystone on which the whole European recovery programme depends.

Mr. C. Williams: Before we pass this Clause. I should like to say that I was

not happy about one point which has been omitted from the answer of the Economic Secretary to the Treasury. I do not know whether he quite realises the amount of feeling that exists among those who run hotels and other amenities of that kind at seaside places in this country. I have frequently been asked to put this point. There is a very strong feeling that the Government could do—and it could certainly do so under this Clause—a great deal more to encourage the trade which would come if we could have far more tourists from France in this country. I believe the hon. Gentleman will keep that point in mind because he is being pressed on all sides about it, but I was rather disappointed that in his reply he did not give some assurance that this matter would occupy an important place in the Government's mind. By getting French people over here we should be helping to remedy the unbalance of payments which exists.

Mr. R. A. Butler: The Minister has given us answers on nearly all the points which we raised and we are obliged to him for doing so. There is, however, a question of the exhaustion or the nonuse of drawing rights. In my opening remarks, I referred to Article 17 of the Agreement for Intra-European Payments and Compensations. Machinery is set up to decide what shall happen either to the creditor who
maintains and satisfies the Council that the whole or any part of drawing rights established by it are no longer required by a debtor for the purposes for which they were established,
or to the debtor who satisfies the Council that it has been unable to use the whole or part of its drawing rights. It says later:
The Council shall establish apppropriate bodies to deal with cases arising under this Article.
Can the Minister tell us whether any such body has been set up by the Council, or could he further elaborate his point? The matter still seems to be uncertain.

Mr. Jay: No such body has actually been set up as yet, according to my information. This is one of the points which have been left over and will be discussed in the near future. The O.E.E.C., of course, has done a great deal of work and has settled a great many problems in the last few months, and, since this is not one of the most urgent problems, it has not been finally settled.

Mr. P. Roberts: The Economic Secretary said that he would go a certain way along the road of multilateral trade. Could he give us any indication of what he considers would be the position with regard to sterling and the dollar if convertibility were reintroduced?

Mr. Jay: I am not sure that that point arises on this Clause. Although we regard greater multilateralism and greater convertibility as an aim, I think it would be a great mistake to try to establish them before we have cured the deficits in our current trade which might undermine their working. We must get the two problems in the right order. We must solve the fundamental dollar deficit first, and then we can talk about convertibility afterwards.

Mr. Eccles: The Minister has answered nearly all the questions I put, but he did not say anything about sterling balances. I asked him to tell us whether he is satisfied that no drawing rights are taken up by any country which has in London sterling balances aggregating to more than what it normally requires for its trade and finances. Could we also have details—perhaps not now, but at a later date—of the 209 million dollars equivalent to sterling balances which it is agreed shall be drawn on before the drawing rights come into operation?

Mr. Jay: We naturally watch that point very carefully. We have no evidence that any country has attempted to act in that way. If we had evidence, we should raise the matter with the country concerned.

Question put, and agreed to.

Clause ordered to stand part of the Bill.

CLAUSE 4.—(ADJUSTMENTS BETWEEN THE ACCOUNTS.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. C. Williams: This is obviously a more or less formal Clause, but as this is a very important Bill we might have an assurance from the hon. Gentleman—this is only really a matter of transferring certain sums from one account to another—as to how, when these transfers are made and the matter comes before the appropriate accounting

authority, such as the Estimates Committee or whatever body it may be, attention will be drawn to the fact that the transfer has been made.

Mr. Jay: This Clause is only necessary for this reason. It may happen that, when the division of aid between conditional aid and grant aid has been decided at the beginning of the year, the Economic Co-operation Administration in the United States may wish to vary it during the year. If it is decided that it shall be varied, we have to make the corresponding adjustment here. That would show itself in the report which the Comptroller and Auditor-General has to make on the operations of both schemes.

Question put, and agreed to.

Clause ordered to stand part of the Bill.

CLAUSE 5.—(AGREEMENTS AMENDING OR CONTINUING THE INTRA-EUROPEAN AGREEMENT.)

Mr. Jay: I beg to move, in page 3, line 29, to leave out from "agreement," to the end of line 30, and to insert:
made between all the parties to that Agreement or by any subsequent agreement approved by the Council of the Organisation for European Economic Co-operation the parties to which include the Government of the United Kingdom.
This Amendment arises from the decision which my right hon. and learned Friend announced in the Second Reading Debate to extend drawing rights of 8 million dollars to Turkey. As the Committee will remember, Turkey was not included in the original list of countries which enjoyed drawing rights against the United Kingdom, and the decision to confer drawing rights on Turkey arises from bilateral negotiations which we have had with Turkey since. An agreement has now been reached between the United Kingdom Government and the Turkish Government, and that will, of course, be subject to approval by O.E.E.C.
I am advised that the Bill as originally drafted would not have authorised us to make payments to Turkey under the agreement. The reason for that is that Clause 3 (2) limits payments to those made under the Intra-European Payments Agreement. There is a secondary provision in Clause 5 (1) for applying the Bill to the agreement:


As for the time being amended by any subsequent agreement to which the Government of the United Kingdom is a party.
That, however, would imply a full dress multilateral agreement between all the O.E.E.C. countries for amending the original Payments Agreement, and is not thought to be wide enough to cover a bilateral agreement approved by the resolution of the O.E.E.C. Council. The Amendment is, therefore, intended to make it clear that the provisions of the Bill will operate in the case of the bilateral agreement we have made with Turkey. Although this has arisen in the case of the Turkish agreement, it will cover any other such bilateral agreements we might make in future with other member countries.

5.15 p.m.

Mr. R. A. Butler: I said on behalf of the Opposition on Second Reading that we were supporting the arrangement with Turkey, and therefore we support the Amendment. I asked on that occasion whether the Chancellor could give us any further information about this matter, and if the hon. Gentleman can oblige us, we shall be very much in his debt. We really have heard very little about it—just an announcement by the Chancellor, and the hon. Gentleman has said very little this afternoon.
The next point is that the Amendment looks to be a wide one. It inserts after "agreement" the words:
Made between all the parties to that agreement or by any subsequent agreement.
We understand that the Amendment deals with the bilateral agreement with Turkey. Can the hon. Gentleman give us any further explanation of the significance of the words:
Made between all the parties to that agreement.
Does that only include the Turkish agreement or has the hon. Gentleman other agreements in mind? Can he give a little more information about the Turkish arrangement and any further explanation about the terms of the Amendment?

Mr. Jay: I cannot give the right hon. Gentleman any additional details about the Turkish agreement, but quite recently we have made, as I said, a general agreement with Turkey which also provides for drawing rights of 8 million dollars to be made available. When the original payments scheme was made last summer,

the Turkish Government reserved its rights to continue the discussions as to whether drawing rights should be made available in its favour. We have held these discussions and have come to the conclusion, on the basis of the estimates of the prospective trade between the two countries and on general O.E.E.C. principles, that a case is made out for a grant of 8 million dollars. I will certainly see if we can give the House further details of the agreement as soon as possible in so far as it has not been published.

Mr. Butler: Will the hon. Gentleman publish a White Paper on the Agreement? Would that be the most convenient form?

Mr. Jay: I hesitate to say at the moment whether it would justify a White Paper, but I agree that a statement should be made in whatever is the most appropriate form.
As to the form of the Amendment, it assumes that any agreement which comes under it will have to be ratified by the Council of the O.E.E.C. The Turkish agreement is, of course, subject to ratification by the United Kingdom Government. With those safeguards, it does not go unduly wide. This is not really contrary to the spirit of the original agreement. The difficulty is merely that it had not then been contemplated that there would be further bilateral agreements between groups of O.E.E.C. countries extending drawing rights in that way. The Amendment does not really do more than enable us to act towards Turkey, as far as drawing rights are concerned, in the same way as we shall be acting towards other countries who had drawing rights under the original agreement.

Amendment agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Mr. Eccles: The Chancellor of the Exchequer said on 27th January:
As we expect the payments scheme to continue in one form or another next year."—[OFFICIAL REPORT, 27th January, 1949; Vol. 460, c. 1118.]
This is the Clause which envisages the continuation of the Agreement. The Opposition want to see a better agreement next year. There are very many lessons to be learnt from the first year's working, and we want to be sure that the


hit and miss method of drawing up the estimates of the import surpluses of the Marshall countries and then arriving at the drawing rights in that way will not be followed next year. Indeed, now that O.E.E.C. is getting down to the business of dovetailing the four-year plans into each other, next year's agreement with regard to the little Marshall Plan covering the provision of funds from the net creditors of the group to the net debtors will be of absolutely first-class importance. So I hope that the mind of the Government is open and that it is considering all possible ways of making a better system. On Second Reading I advanced the view that it would have helped if the Americans had made some off-shore purchases in Europe. In his reply the President of the Board of Trade assumed that I wished to put the whole of inter-European trade on dollar invoices. Of course I did not mean anything of the kind. We all know that that would make the dollar the currency of Europe, whereas we believe that sterling is the currency to which Europe is accustomed and which has still the major rôle to play.
However, I do not see any reason why there should not be some pool of dollars in the hands of the Bank of International Settlement, or whoever is the agent, which could be used in place of drawing rights to attract countries to expand their trade and to export essential goods in greater quantities than they would otherwise. I believe that the President of the Board of Trade holds the view that it would be hard to draw the line between essential and nonessential exports. I think that could be got over by making the dollars that came out of this pool perhaps equivalent to 50 per cent. of the additional exports.
The second point which my hon. Friends are anxious to press about next year's agreement is that the suppliers of raw materials from the sterling area should be associated in its making much more closely. The Economic Secretary himself pointed out that our visible trade with France is almost in balance, but that the trouble comes because the French wish to spend a large amount of sterling in Australia and New Zealand and other parts of the sterling area. On this side of the House we said we would like to have more French goods in order

to provide them with that sterling rather than that it should be given to them by the British taxpayers. It seems to point to the advisability of bringing these suppliers of sterling area raw materials right into next year's little Marshall Plan, and I ask the Economic Secretary whether that is the intention of the Government?

Mr. Jay: The hon. Member for Chippenham (Mr. Eccles) asked me first whether he thought we should be able to make better estimates of the prospective deficits when we come to fix the figures for drawing rights next year. In view of the difficulties of this matter, I do not suppose that we shall ever get perfect estimates, but the experience of the past year ought to have carried us a long way. If we make use of that, we shall be carrying out the best practical arrangement which exists for getting an estimate on which to base these drawing rights.
Secondly he asked whether it might not be useful to establish a dollar pool which could be used by European countries for off-shore purchases within Europe. As I said earlier, we favoured an idea rather on those lines at a much earlier stage of the history of E.R.P.; but having got to the stage we have now reached, and the American authorities taking the view they do, we hold that it is best to discourage the use of gold and dollars in European settlements during the four years. We wish to encourage the use of sterling to the maximum extent, both within the O.E.E.C. group and in the Commonwealth itself. Having gone so far, that is now, we believe, the right policy during the remaining years of the programme.
The hon. Member pointed out that many of the O.E.E.C. countries are spending their sterling in the Commonwealth and outside Europe, and he asked whether the Commonwealth could not be brought into the scheme. Of course, we are entirely in favour of bringing them into the programme, in the sense of ensuring the greatest possible trade between Commonwealth countries outside Europe and the European members of the O.E.E.C. As I expect he realises, we have established the principle with the United States—and I think this is the main substance of his point—that it is the deficit of the whole sterling area with the dollar countries which is taken into


account when the United States is deciding on the grants which will be made to the United Kingdom. That is economically right, although it may appear slightly anomalous that the grant should be made to the United Kingdom. The reason why the grant can only be made to the United Kingdom is because Australia and New Zealand, for instance, are not members of the O.E.E.C. That, in turn, is due to the fact that O.E.E.C. is a European organisation and the original invitation from General Marshall was to European countries to get together and form this organisation. It has grown up on that basis. That being so, we have had to seek the most satisfactory and helpful way of bringing the Commonwealth within the spirit rather than letter of the scheme.

Mr. Boothby: I thought the answer of the hon. Gentleman was interesting and, as far as it went, quite convincing, but surely O.E.E.C. is not a purely temporary organisation. It is likely to continue for many years to come, and in his discussions with the United States of America he ought to emphasise the point made by my hon. Friend the Member for Chippenham (Mr. Eccles). After all, it is not really European competition that the United States have to fear over the next decade, it is European collapse. If Europe was tied up much more closely with the Commonwealth in the economic field, the United States would have far better security and, ultimately, a far better field for investment.
I believe that the United States themselves are gradually coming round to this view. Their prejudice against the Commonwealth as a political unit has altogether disappeared, and I think their prejudice against it as an economic unit is rapidly disappearing. I do not want to say any more tonight than that the more His Majesty's Government can impress upon the United States the desirability in their own interests of strengthening, not merely Europe but the whole sterling area, the better, because it is lopsided without the providers of raw material. It must be so. They are strengthening Europe as a unit, which is primarily an industrial unit, and more than ever so since Eastern Europe is to a large extent cut off. Unless, therefore, in the next year or two they can include the raw material suppliers of that unit, they will not have a balanced or powerful

economic unit and their money may easily go into the sand. On the other hand, if they gradually build up the sterling area as a whole, making it a balanced economy, including the Commonwealth, they themselves will have much greater security and the recovery of Europe will be infinitely hastened.

Question put, and agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clauses 6 and 7 ordered to stand part of the Bill.

Bill reported, with an Amendment; as amended considered.

Motion made, and Question proposed, "That the Bill be now read the Third time."

5.30 p.m.

Mr. R. A. Butler: We do not wish to detain the House on the Third Reading, but this is an important Bill and I think we have found it valuable to consider it thoroughly and to receive this afternoon some clear answers from the Economic Secretary to the Treasury. From our point of view the time has been well spent.
There appear to emerge from the Bill two major issues which have been ventilated in the course of our discussion and which are covered by the terms of the Measure. The first is that we on this side are particularly anxious to retain for Britain her traditional rôle as an entrepôt trader and great commercial and financial centre, not only for Europe but for the world. We should be very regretful if the rigidity of any Intra-European payments plan did away with our traditional rôle. From what we have heard from the Government in the course of our discussions, it would appear that they are aware of this necessity.
It hardly needs any words of mine to stress the fact that the easiest way in which the Chancellor could overcome his difficulties is by encouragement of what are known shortly as "invisibles." They have always been a great feature of our financial system in the past and without them we cannot hope to balance our accounts as we should do in the future. I trust, therefore, that in making these rigid schemes under the Bill, we shall not only have regard to suggestions made


for amending them, but we shall retain our traditional rôle as an entrepôt trader and a financial centre.
The other main point which has arisen in the course of our discussions, and which it is appropriate to mention on Third Reading, is the need to look upon this island as the centre of the sterling area and the centre of an important and lively Commonwealth. That point was made only a few minutes ago, so I need not say much more about it, but I should like to stress, and to draw the attention of hon. Members present and those outside to the fact just mentioned by the hon. Gentleman that in assessing the position of the United Kingdom, account was taken of the resources of the whole sterling area. I should like the hon. Gentleman to elaborate that point and to indicate to us the nature of the inquiries which were made about the resources of the sterling area before the conclusions to which he referred were reached.
In the remarks which I had proposed to make earlier today, I was going to say that on the United States side the most elaborate inquiries were made as to the effect of the proposed Marshall Aid upon the American economy. I wish that a similar inquiry had been made into the whole resources of the sterling area to find out what would be the effect of these arrangements upon the sterling area and what would be the likely drain on sterling. The hon. Gentleman's answer has revealed that this matter has received rather more consideration than we had anticipated. If he can elaborate in any way the inquiries which must have taken place and the conclusions come to on the effect on the sterling area of these plans, he will be doing a further service.
Those are the two major issues. They unite in the one thought that in these matters, this country must lead not only Europe but the world. If this country approaches a plan like this in the spirit in which we have looked at it this afternoon; if it is prepared, with the other countries concerned and with the United States of America, to amend the plan, then we may lead Europe and the world back to better conditions. Meanwhile, we can only express our gratitude to the United States

for the aid which makes this plan possible and do our best to co-operate under the plan in order that it may work out in the right way.

5.34 p.m.

Mr. Jay: I should like to associate myself and my right hon. and hon. Friends with the tribute which the right hon. Member for Saffron Walden (Mr. R. A. Butler) has again paid to the generosity of the United States in making this aid possible, and also to say, on behalf of my right hon. and learned Friend, that we appreciate the constructive attitude which hon. Members opposite have adopted towards the Bill this afternoon.
The right hon. Gentleman made two points. First, he emphasised the importance of invisible exports from the United Kingdom generally in our recovery effort. I think that there is absolutely nothing between us on that point. As he knows, my right hon. and learned Friend recently gave figures of the remarkable rise in our invisible exports, which have contributed so much to the improvement in our balance of payments in the last year. We are, of course, taking all sorts of steps to ensure that that rise continues, particularly, for instance, in the tourist trade and in shipping, both of which we are successfully developing.
Second, the right hon. Gentleman said he hoped that the United Kingdom would remain the centre of the sterling area and, in an economic sense, of the Commonwealth. It may well be that the European Recovery Programme will go a long way to strengthen and develop not merely the United Kingdom, but the Commonwealth as a whole, for the reason that it will put into our hands the resources which we can use for the development of many parts of the Commonwealth. The right hon. Gentleman will have noticed that investment, both at home, in the Colonies and elsewhere, figures very largely in our Four-Year Plan, for the reason which I have just given.
The right hon. Gentleman asked me to elaborate about the inquiries made before we estimated the whole sterling area deficit for the purpose of putting in our bid, in a statistical sense, for Marshall Aid. The fact is, of course, that throughout the last two years we have been


making elaborate statistical reviews and calculations continuously on all aspects, not only of our own balance of payments, but of those of all the other parts of the sterling area, with the dollar countries. That matter has been thoroughly examined, for the purpose of correcting the dollar drain, and of drawing up our own Four-Year Plan, and, of course, finally for the calculations within O.E.E.C. which were necessary before we could make our applications for dollar aid. That process will, of course, go on, and if the programme continues and prospers, and if we obtain an allocation of dollars next year somewhat similar to what we estimate our needs to be, I have no doubt that the whole of our four-year programme, and the development of the Commonwealth countries in particular, will go forward together.

Question put, and agreed to.

Bill read the Third time, and passed.

Orders of the Day — EXPORT GUARANTEES (MONEY)

Resolution reported:
That, for the purposes of any Act of the present Session (hereinafter referred to as 'the Act') to make further provision with respect to the powers of the Board of Trade to give guarantees in connection with overseas transactions it is expedient:

A. To authorise the payment out of moneys provided by Parliament of expenses of the Board of Trade under the Act in connection with arrangements—

(i) for giving, after consultation with an Advisory Council, guarantees (up to an aggregate amount of five hundred million pounds in respect of the liability of the Board at any one time under the Act and certain other enactments) for the purpose of encouraging trade with places outside the United Kingdom (as defined in the Act), being guarantees given in connection with matters which appear to the Board of Trade conducive to the said purpose;
(ii) for giving further guarantees (up to an aggregate amount of one hundred million pounds in respect of the liability of the Board at any one time under the Act and certain other enactments) for the purpose of encouraging trade as aforesaid or for the purpose of rendering economic assistance to countries outside the United Kingdom, being such guarantees as appear to the Board to be expedient in the national interest.

B. To provide that in the event of any amount required for fulfilling any guarantee given under the Act not being paid out of moneys provided by Parliament it shall be charged on, and issued out of, the Consolidated Fund.

C. To authorise the making from time to time out of the Consolidated Fund of issues of such sums as may be required to enable the Board of Trade to acquire securities guaranteed by them under the Act and certain other enactments.
D. To authorise, for providing money for making such issues, or for replacing such sums, the raising of money in any manner in which it is authorised to be raised under the National Loans Act, 1939.
E. To authorise the payment into the Exchequer of interest on such sums, the repayment into the Exchequer of such sums, and the payment into the Exchequer of the amount by which the receipts of the Board of Trade in respect of the securities acquired by them as aforesaid exceed the amounts required for the said payment and repayment, and to authorise the issue out of the Consolidated Fund of such payments and repayments and their application in redemption or repayment of debt or, so far as they represent interest, in payment of interest otherwise payable out of the permanent annual charge for the National Debt."

Resolution agreed to.

Orders of the Day — EXPORT GUARANTEES BILL

Considered in Committee.

[Major MILNER in the Chair]

CLAUSE 1.—(EXPORT GUARANTEES.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

5.39 p.m.

Mr. Oliver Lyttelton: I intervene only to explore a question which is causing some anxiety. This is an administrative matter which, I think, I may conveniently raise at this stage. Since the Second Reading I have received complaints about the arrangements under which the Department insists upon exporters insuring with them all their risks in a certain country. I do not suggest it would be in any way a sound method of conducting business to have all the risks where the possibilities of loss are small written outside, leaving the Government with only the bad risks, but there are one or two things which are worth explanation by the right hon. Gentleman this afternoon.
For example, I have received a complaint—I hasten to say I did not accept it at face value, but I am asking for information—that unduly high rates are charged for the insurance of exports which are upon cash against document terms and that exporters have to pay very much higher rates on these


ordinary contracts because they wish to write some of these other very difficult risks with the Department. They cannot write the difficult risks unless they also write the ordinary risks and the rates charged on the ordinary cash against documents type of exports, it is represented to me, are unduly high. I have even heard of figures of 7s. 6d. per cent. as against 2s. 6d. or 3s. per cent. outside. That is a superficial statement and I have not had the opportunity of checking it up, but I should like the President of the Board of Trade to give an explanation and to assure the Committee that the fact that the Department have to write all the risks—I think they must insist on that—is not to be made an excuse or pretext for charging unduly higher rates than commercial rates for risks normally insured, or perhaps not usually insured at all.

Mr. Benson: A point on which I had the support of the hon. Member for Chippenham (Mr. Eccles) on Second Reading arises on Clause 1. The benefits of this Bill are limited to persons carrying on business in the United Kingdom, but I think there is a very strong case for extending the scope of the Bill and giving its benefits to persons who are not resident in this Kingdom and offering them insurance, just as our great insurance companies do in any part of the world. There is no reason why we should not offer to insure trade which never touches this country carried on between persons neither of whom are British nationals or associated with Britain. I have no doubt we should have to get the permission of the countries involved, but I am not certain that that would be difficult.
Everyone knows that the Export Guarantees Scheme has been of enormous assistance to this country and we are in a unique position to give that assistance to our own nationals because of the enormous accumulated knowledge of overseas trade which we possess and also because of the traditional skill of the City of London. We could do this whereas others could not. I think we are practically the only country, I am not sure about America, which offers this facility to our traders. In the old days there was what was known as a "London bill." It was a bill on London and was, in effect, a guarantee. It was a different

type of guarantee from that which we are offering, but, nonetheless, it was a guarantee in that the bill was backed and accepted in London. The effect was to make sterling the world currency. It earned us a good deal of invisible exports in foreign exchange and probably went a long way towards making sterling the dominant world currency.
It is obvious that there is an immense advantage to this country in any expansion or extension of the use of sterling in international trade. Many countries, particularly in South America, do balance their trade in sterling to our rate of values and anything that facilitates the use of sterling is to our advantage. I hope the President will look into the question. I do not think there are technical difficulties, or that there will be any great difficulty in getting other countries to allow us to offer what I might term a world service, but there are very great advantages to us and to others if this can be done. I hope my right hon. Friend will look at the suggestion seriously.

5.45 p.m.

Mr. Eccles: The hon. Member for Chesterfield (Mr. Benson) referred to the support I gave him on Second Reading. I want to see this type of insurance widened as much as possible. I think it true to say that many foreigners, knowing that the United Kingdom is the only country where such risks are underwritten, say to some broker in Liverpool, or London, "I will give 2s. 6d. per cent. and you can act as principle," and that brings a little more money to us. I would not be in a hurry to cut out the broker here. He can get business from abroad and get a profit on the turnover. The President of the Board of Trade is more expert on this matter and may be able to give us a more detailed explanation.
This Clause is very important because it increases the limit of the commercial guarantees from £300 million to £500 million and, as the President told us on Second Reading, it broadens the whole basis on which the Department works. In fact I think the Advisory Council will have less to do than formerly, because it is evident from what the President said, that he would like to bring into the scope of the guarantees pretty well everything that the Board of Trade considers would assist the earning of money from places


outside the United Kingdom, that if the Advisory Council considers the risk is not a good one there is £100 million behind it and the President of the Board of Trade can write it on his own. I take the Clause to be something which is considerably reducing the importance of the business element in this insurance system and, if that comes about, I forecast that the losses will be greater than in the past.
We all want to give as much help as we can to the exporter. Therefore we welcome the expansion of the limit, but we desire to know on what grounds the Government think they will require this extra £200 million. The President told us something about the invisible items which are now to be brought in. I have been trying to find how they could possibly amount to any large sum. There is no credit risk to be insured in regard to shipping. The shipowner today will not part with the documents relative to the cargo until he has been paid his freight so there is nothing to be done there.
There only seem to be small sums in the categories the President mentioned and I wish to ask about one of them. What is this financing of sales agencies overseas? Is that to come under the commercial risks, or under the special risks? What exactly is insured? I cannot see precisely how the policy can be written. If a man spends £5,000 setting up an office in some foreign capital is it the business of the Department to guarantee his money if the selling agency is a failure? What exactly do the Department do to assist in setting up those sales agencies?
The President mentioned the contractor's equipment. We agree of course that it is valuable to be able to insure that sort of risk. But surely what the public works contractor really wants is to be able to cover his retention moneys as well as the first 85 per cent. of the contract. I am told that the Department at the present time will not insure that proportion of the contract price which the foreign customer retains until he sees whether the bridge stands up to the strain, or the hydro-electricity works work, or whatever it may be. Would the President consider increasing the scope and bringing in these retention moneys?
The President also said that the power would be used to steer exports. I shall

be obliged if he would tell us just how this is going to happen. Then the President said:
But I can give the House the assurance that the Board of Trade will maintain very close contact with the Export Credits Guarantee Department to make certain especially that transactions in goods of foreign manufacture which might compete with United Kingdom produced goods will not be encouraged."—[OFFICIAL REPORT, 2nd February, 1949; Vol. 460, c. 1684.]
I should like to hear some more about that. Suppose, as indeed was the case, that the Middle East wanted motor cars and a British motor manufacturer cannot make the delivery. On the other hand there is a manufacturer of cars in France who can make delivery to the Middle East, and a British merchant would make a profit out of being the middle man in this transaction. The President will not allow that to take place for fear of competition. Can we not carry this reluctance too far? Is not the right principle to expand trade in Western Europe and to get goods moving, and when a market like the Middle East wants something we are unable to supply is it not reasonable that we should help to get it from somewhere else, and make a profit out of it at the same time? I would like to know exactly how the President is going to use that particular power.
My right hon. Friend brought up the very vexed question of the Department's rates on cash against documents business. What it really comes to is this. The Department is acting as though I were going to it and saying, "Will you insure my life?" They say, "Yes, provided you take out a policy for your wife and five children as well." That is the way the Department is acting in regard to some of this business. When goods are shipped cash against documents to a safe country like North America, which of the eight risks in the Department's policies are really worth insuring? Only the war risk. The rest of the risks are not worth insuring. The exporter would still have possession of the goods even if the buyer did not take them up. Therefore it is unreasonable when a trader does a certain amount of his business on C.A.D. terms, and still more if it is on irrevocable letters of credit, that this part of his business should also have to be insured in order that he might get cover for the political risks and the insolvency


of his buyer on account of goods he is sending to other more risky markets.
As the object of the Department is to help the export trade, and as we are getting to a time when prices will be very competitive, it is in the interests of the export trade that this selection of risks should be allowed. I endorse what my right hon. Friend has said. We do not want the Department only to insure the really bad risks. We want the thing to work out so that it is on a proper basis and whatever losses are anticipated are covered by reasonable premiums. But this is going too far in the other direction, and I hope that the President will tell us something about that point.

The President of the Board of Trade (Mr. Harold Wilson): The right hon. Member for Aldershot (Mr. Lyttelton) raised this question of the insurance of all risks, and I know that it is a point on which there has been comment in the past in some quarters. The right hon. Gentleman's close and intimate knowledge of this Department, through his association with it over so many years, means that he is one of the greatest authorities in this House on this matter. As he knows, this requirement of the financing of risks relates to consumer goods only and not capital goods. So far as capital goods shipments are concerned each one is regarded as an entirely separate transaction. So far as consumer goods are concerned there is no requirement that an insurer has to cover all his trade in those goods. The Department merely requires him to insure a reasonable and representative spread of these risks in various markets. If it were not possible to do that, the average rates and charges made by the Department for some of this business would have to be a good deal higher than at present.
The right hon. Gentleman and the hon. Member for Chippenham (Mr. Eccles) mentioned also complaints received about high rates charged for cash against documents trading. I shall be very glad to look into this with the Department, but I have not myself had any complaints about it. I should have thought that traders generally considered the rates charged for this particular form of trading to be reasonably low, and they have in fact been recently reduced, but I am prepared to look into it.
My hon. Friend the Member for Chesterfield (Mr. Benson) raised the question of persons not resident in the United Kingdom. As he knows, the services of the Department are not at the moment restricted solely to British nationals, but they must be persons normally carrying on some form of trade in the United Kingdom. He suggested that there is a big field for us to cover in trade never reaching this country at all, but just between second and third countries. An enormous volume of trade between third countries is in fact insured by the Department, provided that that trade is itself initiated and carried through by persons who are themselves carrying on trade in this country, even though the particular goods and the trade never come anywhere near this country.
My hon. Friend's suggestion was that we might earn small or even large amounts of money if the Export Credits Guarantee Department were to offer to cover trade carried on by merchants in country B, being a country other than the United Kingdom. That means financing trade between B and C, or even C and D. It is not correct, as my hon. Friend suggested, that we are virtually the only country to provide this cover, because there are export credit guarantee departments, of a varying degree of value and efficiency, in a large number of other countries. I do not think there would be a very big field here and if we were to take this too far it would mean helping the traders of other countries against our own. I agree with what the hon. Member for Chippenham said that there are a good number of people notionally or actually in business in this country who do it through brokers and get the cover of our own trading services. I think that carries that business far enough. If we went further it might have the effect of encouraging the invisible exports of other countries against our own traders in this country.
The hon. Member for Chippenham rightly said that this first Clause of the Bill widens the whole basis of the operations of the Department. He commented on what I had said, that there was going to be some use made of the special guarantee. He suggested, and rightly, that the commercial guarantees will still be an important part of the work. For a moment he sounded as if he felt that by increasing the use of the specials we were


expecting commercial guarantees to become less important, and he said that if that happened, if there was a big swing over from commercial to special guarantees, the losses of the Department will be greater. I am sure that when he referred to losses being greater he was not referring to net losses, because he knows that the Department as a whole made considerable profits. Perhaps what he really meant, on a net basis, was that the profits would be less or might even turn into a loss
6.0 p.m.
He was particularly concerned to know why we felt it necessary, particularly when we were putting a greater emphasis on special guarantees, to increase the maximum liability in respect of commercial guarantees. I think the main answer must be the developing character of trade. The figures given during the Second Reading show that month by month and quarter by quarter the use made of this Department is growing, and the best view that we can form is that we certainly ought to increase the size to cover the purely commercial work. The fact is that we believe this commercial work requiring advice from the Advisory Council will be increasing at such a rate as to make this figure necessary. I hope that that will to some extent set his mind at rest about the fear he expressed that, in one sense, we might be cutting down on the commercial work.
He mentioned further a reference which I made during the Second Reading to the question of steering exports. I have to tell him that we have not yet completed working out the ideas about which we may wish to tell the House on this matter of steering exports. But it certainly is a fact, as the hon. Member for Louth (Mr. Osborne) will know, he having just returned from the United States, that in some of these high priority dollar markets there are very great risks in selling, very great difficulties involved, and we are trying to work out some means—and it is not so easy—to give some kind of incentive to exporters to go into those markets.

Mr. William Shepherd: I am not at all clear what the right hon. Gentleman means by the special and great risks attached to selling in the North American market. I should be glad if he would tell us more about that.

Mr. Wilson: They are risks so far as the individual trader is concerned. He has not been trading in this market. He regards it as a rather dark and unknown field in which to venture. He would rather stay in a safer market, perhaps at home. If he is to set up there he might need some kind of assistance or help, not necessarily through the medium of E.C.G.D. We may have to consider other ideas shortly, but as we are still working this out, I would rather not say more at the moment.
The hon. Member for Chippenham took me up on the phrase I used during the Second Reading about competing with United Kingdom manufacturers and not encouraging trade which would compete with them. If he had got from my words the impression that we should not want to encourage the form of trade he mentioned, then I can understand him raising the matter, because we should want to encourage that kind of trade. The case he mentioned envisaged the motorcar trade in the Middle East in circumstances where United Kingdom manufacturers would not be able to deliver. It might he reasonable from every point of view to assist trade with exports from France or some other Western European country, and we might at the same time make quite a tidy and useful little profit out of the arrangement. I entirely agree that that kind of transaction is one which we should most certainly wish to encourage. But the case he took began from the hypothesis that the United Kingdom manufacturers could not deliver and, therefore, that would not be competition with British manufacturers, at least in the short-term. I agree that over a long period it might be regarded as competition and obviously we should have to use considerable discretion about what was and was not going to be competition with our own manufacturers.

Mr. Lyttelton: I thank the right hon. Gentleman for his promise to look into the matter of insurance on cash against document contracts. I hope that he will not read me as meaning that the premium to be charged on all cash against document credits should be the same. In fact, the risks vary very widely. I am only entering a plea that where they are what we may call normal contracts—cash against document—the rates charged by


the Department should be those generally applicable in other parts of the City to that part of the business.

Question put, and agreed to.

Clause ordered to stand part of the Bill.

CLAUSE 2.—(FURTHER POWER TO GIVE GUARANTEES IN NATIONAL INTEREST.)

Mr. Eccles: I beg to move, in page 2, line 21, to leave out "one hundred," and to insert "sixty."
This is the only Amendment we have seen fit to put down to this Bill. It is one of considerable importance. Clause 2 deals with the special guarantees. Those are the guarantees which the advisory council of business men do not find a good commercial risk. They are given entirely in the discretion of the right hon. Gentleman. At the time the Bill was introduced, this type of guarantee was subject to a limit of £60 million. In the course of the Second Reading I asked the Government how much of that—60 million was actually used, and the Economic Secretary to the Treasury replied:
As a matter of fact, there is only £8 million outstanding. We are nevertheless raising the total to £100 million because we expect a considerable expansion of business under this head."—[OFFICIAL REPORT, 2nd February, 1949; Vol. 460, c. 1716.]
It really does lie with the Government to give very detailed reasons why they want another £40 million when they only used £8 million out of the £60 million which they have had at their disposal for some time. Unless some very much fuller account is given than that which we had on Second Reading, I should feel exceedingly dissatisfied with the Clause as it stands. Formerly, as the President of the Board of Trade told us, these special guarantees were of a political nature. They were used to facilitate the export of arms. Roumania or Greece came to this country and said that they wished to have some rifles. They were supplied by a British manufacturer who gave credit to these countries which was insured with the Department and when the countries did not pay—Roumania to the tune of £1,250,000 and Greece to the tune of £300,000—the Department paid up. Now the President says:
… there is even more need than in the past for special guarantee facilities in order

to encourage trade with very many countries, the risks, whether political or otherwise, in connection with which could not be regarded as commercially insurable."—[OFFICIAL REPORT, 2nd February, 1949; Vol. 460, c. 1686.]
Therefore, the first big reason for which we are asked for this extra £40 million is that of trade with Eastern Europe. I want some further explanation from the President about this Iron Curtain trade and the extent to which he expects that it will be insured under this Clause. As I understand it, the £4 million of credit to Finland is already the subject of a special guarantee. On the other hand, I take it from what the President said during the Second Reading, that the £14 million of credit for the Russians is considered a commercial guarantee. Where does he expect that we shall need £50 million, £60 million or £70 million of special guarantees in these essentially difficult markets?
Fortunately, the right hon. Gentleman delivered a speech last night to the Fabian Society in which he discussed precisely this kind of trade which is to be the subject of these special guarantees. He said that there was nothing political in the trade—that we were only going to try to get the things we needed, that, if an iron curtain country tried to place orders with British manufacturers for goods which take some time to deliver, the British manufacturer would go to the Export Credits Department and insure his payment.
Let the Committee observe that this is really a second kind of Marshall Plan, a method of giving drawings to Eastern European countries. An hour ago, we were discussing the drawing rights between the Marshall countries. Without this guarantee it is quite certain that these Iron Curtain countries would not be able to place orders here. Is there nothing political in permitting this supply of goods to these countries? I consider that these trade agreements with iron curtain countries are part of the tactics of the cold war, and it is absurd for the President to say that there is nothing political in them. If we have a totalitarian Government like that of Czechoslovakia, are we to guarantee the payment by that Government of millions of pounds under this Clause? If so, we are in fact financing the continuance of a Government which is inimical to this country, and exactly the same obtains when we


give credit to any of these Communist Governments. I want to know where the Foreign Office comes in, and whether they approve that the President should have this enormous power to insure credits given to those countries who are now in the cold war on the wrong side. We require a great deal more information before we pass this Clause.
I was reading this morning Article 10 in the new Anglo-Polish Agreement, where hon. Members will see the credit facilities which we are giving to the Polish Government. Will the right hon. Gentleman tell us if he will be insuring them under the special guarantee? This is a very extraordinary development which is going on now. It is giving the Government the right to ensure that these countries can place millions of pounds' worth of orders here, and our manufacturers know that, if anything goes wrong politically inside the iron curtain country, they can have recourse to the British taxpayer. I say that this is an important move in the cold war, because many of the goods which we are to send to these countries, and which will help to build up Governments which are destroying liberty and enslaving the population, are wanted by markets such as Canada. The Canadians are constantly saying that they could take these manufactures from us, but we say that we must reserve them for bilateral dealings with iron curtain countries. I think some of our suppliers will very rightly ask what we are going to do under these special guarantees.
I turn now to another aspect of this matter. The President mentioned that he is going to extend the use of these special guarantees to cover fixed price contracts; that is to say, and I quote the President's own words:
For instance, there are 'fixed price' contracts for capital goods requiring a very lengthy period of manufacture, for which the United Kingdom exporter desires cover against possible substantial increases in the price of materials and cost of labour between the time of signing a contract and the delivery of the finished goods to the overseas purchaser."—[OFFICIAL REPORT, 2nd February, 1949; Vol. 460, c. 1686.]
Here is something new—the Export Credits Department insuring something which is not a credit. That is an entirely new form of business. Will the President tell us on what basis it is possible to write a risk that wages will not go up in the next four years or that some materials will not increase in price? Is

the whole thing to be attached to a series of index numbers? My right hon. Friend the Member for Aldershot (Mr. Lyttelton) in his great business, which he manages so successfully, has difficulties about the rise and fall of costs. Normally, there is an escalator clause in the contracts, but how is it possible to insure against the rise? How much of our money is to be at stake against the risk of rising wages in some manufactures and industries in the next four years? It is very peculiar business for the British Government to take on.
6.15 p.m.
Thirdly, I imagine that some of this money is wanted for what the President described as "unorthodox transactions in hard currency markets." What are they? What is the risk in a hard currency market against which an exporter desires to insure? The main risk is the insolvency of the customer, and the other risks are really not of much importance. Surely, it is not going to require £100 million of special guarantees to cover the possible insolvency of the customer, which will normally be written as a commercial risk in the British or North American markets? What are these "unorthodox transactions"? We have, somehow, to accept the fact that, at any rate, they mean £60 million; otherwise, it is absurd that that figure should be contained in the Clause as it stands.
I feel strongly about these things. On all hands, and on both sides of the House, we are preaching economy in Government expenditure, and we are saying that it is necessary throughout the whole country that people should not waste money and should not develop extravagant habits. Here we have the Government, having spent only £8 million out of £60 million, now asking us for £100 million. For these reasons, I beg to submit this Amendment.

Mr. H. Wilson: The hon. Gentleman has approached this question in a slightly suspicious mood which I find rather unworthy of him. I quite agree that this increase does require to be justified, and, though I made some small effort to do that on Second Reading, it apparently failed to satisfy the hon. Gentleman, so I will now try to make the matter clear to him.
Firstly, there is one point concerning the quotation which he made from my speech which I would like to take up.


I have not got HANSARD with me, but I do not recall that, in the sentence he quoted, I referred to Eastern Europe. I thought I had in fact said at least as much in regard to the Western hemisphere as about Eastern Europe. The hon. Gentleman has, however, quite rightly deduced that there was some idea about Eastern Europe in my mind when I made the remarks which he has just quoted. He has asked me a question about that, and perhaps it is right that I should try to answer it without going too wide of this Clause.
Obviously, we cannot debate the whole series of bilateral agreements with Eastern Europe, or with anyone else, on this Clause. I have no doubt that, in a later passage than the one which the hon. Gentleman quoted, I did mention the Eastern European countries. The hon. Gentleman also said, quite rightly, that in a speech which I made outside this House last night I said that politics do not enter into our trading relations with Eastern Europe. By that I meant we are persuaded that, in our bilateral trade arrangements, there must be an economic advantage to this country. If we were considering a trade deal with Ruritania, and that trade deal did not have any economic advantage to us, we should not sign an agreement with that country merely to get some political easement or appeasement of the situation. That sort of thing used to go on before the war, but we are not doing it as part of our economic policy today.
Our economic policy in relation to Eastern Europe is entirely a function of the economic advantage to ourselves. I quite agree with the hon. Member when he says that if we are trading with countries in Eastern Europe, or, indeed, with those in South America, politics do enter into it, though not on our side. We are not going in for uneconomic agreements for the sake of some, perhaps, highly dubious political advantage. I also agree that if one enters into trade agreements with Czechoslovakia, Poland or the Soviet Union, one is dealing with countries in which the political element does enter to a very marked extent into their trade and trading organisations.
The hon. Member went on to say that this kind of trade arrangement is really a form of Marshall Aid from this country

to Eastern Europe. There is certainly no foundation at all for that suggestion. For the sake of argument, if we were having a trade agreement with, I would prefer to call it, Ruritania—there is quite a number of countries who would fall under this general description—which provided for our getting, say, £20 million, or £10 million or £30 million worth of much needed grain or much needed raw materials from them, and if they were going to place orders for, roughly, an equal quantity of capital equipment in this country for delivery in one, two or three years' time, the mere fact that we were granting credit guarantee facilities for the financing of that trade would not mean that we were giving credit as such to Ruritania. It means we are giving assistance to our own manufacturers so that their money is not locked up for long periods while waiting for repayment.
Whether we are giving—to use the hon. Member's phrase—Marshall Aid to Ruritania in those circumstances would depend entirely on the speed of deliveries and on the extent to which they could purchase other goods currently. Therefore, on the question of what was happening to their sterling balances over that period, it might easily happen that, in such a trade arrangement with Ruritania, there might be £3 million, £4 million or £5 million worth of credit facilities given to manufacturers because of the necessarily slow rate of deliveries, and it might be that the Ruritanians' sterling balances were increasing by a figure of £10 million or £15 million in the first or second year. What is happening, therefore, is that, on balance, we should not be giving credit to the Ruritanians; they would be giving credit to us. That is certainly a thing that can happen, not only in Eastern Europe, but more particularly in South America.
The hon. Member went, I think, a little wide of this Clause—I do not wish to follow him very far into it—when he said that it was wanted by us for the purpose of financing some great scheme of export development to Eastern Europe at the expense of important markets in the Commonwealth, such as Canadian markets. I want to assure him right away that there is no such idea in our minds at all. I have often heard the suggestion made that we are exporting capital and engineering equipment to Russia and other European countries which is wanted


by Canada. I do not know who is responsible for spreading these stories, but I want to tell the Committee that there is nothing in them at all. Only this afternoon my right hon. Friend the Minister of Supply and I had a Press Conference at which Mr. Gilpin, the leader of the Engineering Mission to Canada, was present. The main purpose of that conference was to get across to all our engineering manufacturers and exporters the need for increased exports to Canada in view of the top priority character of the Canadian market.
Last year, out of a very tine total of exports of engineering equipment to the world at large, only about 2 per cent. of our total exports went to Canada. I want to see that figure very greatly increased, and so, I believe, does Canada. Of course, what has been holding us back in shipments to Canada has been the fact that, in the first place, many of our manufacturers have not been tempted to try their hand there because they are afraid of American competition, and, secondly, that very many of the Canadian purchasing agents, whether private firms, public utilities, provincial governments or municipalities, have been very slow to place orders with us, in many cases barely realising that the United Kingdom was in a position to supply.
It is not a fact that we have been exporting to Russia or other countries goods which Canada wanted, and that we have turned down their requests for such goods. If the Canadian Government, or any Power, want these goods, His Majesty's Government will certainly do everything in their power to enable British manufacturers to meet the orders, and to meet them quickly and on the best possible terms.

Mr. Osborne: There are two points I wish to put to the right hon. Gentleman. Two months ago when I was in Toronto, I came across the suggestion on many occasions that we were exporting goods to Europe which the Canadians wanted. I do not think that anyone deliberately spread that story in Canada, but I certainly came across it on many occasions. The second point I wish to put to the right hon. Gentleman is whether he will emphasise to British manufacturers who, he said, are afraid to go into the Canadian market because of American competition, the fact that

Canadians are just as short of American dollars as we are, and that, therefore, there is a wonderful market for them in Canada if only they will seek it out.

Mr. Wilson: When I was dealing with the point, I was doing so in connection with the reference made by the hon. Member for Chippenham (Mr. Eccles) to engineering exports, and not to supplies in general. Undoubtedly, our Canadian friends feel that we are shipping quantities of steel—very small quantities indeed—to European countries, to West, East and South American and to Commonwealth countries which the Canadians would like to have. There is nothing we should like better than to let them have it. With regard to capital goods to which the hon. Member referred, it is certainly not a fact that Canada is being starved in any way in order that bilateral agreements with other parts of the world may be implemented.

Mr. Beverley Baxter: In explaining why we did not supply more engineering equipment to Canada, the right hon. Gentleman gave as one of the reasons that individual purchasers in Canada did not know that we were in a position to supply them. Will the right hon. Gentleman say whose fault that was? I realise that it was not necessarily the fault of the Government. Can he say why the engineering industry, and, perhaps, the Government, failed to let Canada know that we were in the position to supply this equipment?

Mr. Wilson: I do not want this afternoon to begin to apportion blame between manufacturers, the Government, or anyone else. I hope that the hon. Gentleman will study the Report of the Gilpin Committee on this important subject. It is being published by the Stationery Office this evening; it is 40 or 50 pages long, and deals with the point which he and the hon. Member for Louth (Mr. Osborne) raised. I think he will see from the Report that the Committee have been discussing the possibility of getting over this difficult problem.
The hon. Member for Chippenham quite rightly pointed out that, so far, the maximum liability under this form of guarantee has been about £8 million as against a possible £60 million, and that we are now seeking to raise that figure


to £100 million. I want to assure the Committee that we have no intention of trying to guarantee exporters against unduly hazardous or quite crazy risks, but the fact remains that either because of political uncertainty, or because of the uninsurability of certain risks on a normally acceptable basis, we need to provide a much bigger limit than we have so far done. It is a fact that a growing proportion of our export trade is now in capital equipment, very often to countries which the Advisory Council might not regard as very sound or safe commercial risks, and which involves locking up the money of the manufacturers and exporters for a year or two, or, in some cases, for three or four years ahead.
Obviously, if a higher proportion of our exports are going to these countries in the shape of capital equipment, we need a much bigger maximum liability, because £1 million spent in financing or covering capital equipment might do only half, one-third of one-quarter of what it would do if spent in financing goods which can be delivered much more quickly. If one were financing the export of textile machinery, where at the present time there is in some cases a four or five years delivery date, one might need three, four or five times the cover as in the case of financing the export of textiles to the same country. That is one main reason why we want to see these figures increased.
6.30 p.m.
I imagine it would work like this. In many cases the Department and the Advisory Council, working on a commercial basis, would decide to accept a risk up to a certain amount. When that amount has, been reached they might say either that all further liability should be taken under Clause 2 (2), the special guarantees Clause of the, Bill, or alternatively the Department might decide not to offer cover beyond that limit, in which case probably the exporters would decline to accept the contract. In other words, the hon. Member can be assured that it is not intended that all this special trade would be covered from the special guarantees. What is likely to happen is that the Advisory Council would regard it as safe to go to a certain figure. They would regard going beyond that figure as too risky and feel that it would

have to be covered by the special guarantee.
The hon. Member asked about fixed price contracts and I agree with him about the difficulty of covering fixed term contracts for a long time ahead. It is a fact, however, that a number of most important exporting organisations of high repute—naturally I would not want to give their names this afternoon, but if I did give them they would be names in which I know the hon. Member would have every confidence—have on more than one occasion come to the Export Credits Guarantee Department and made it clear that in their view their chance of getting a particularly important contract with a highly important country, in this case not in Europe at all, depended on their being able to offer some kind of fixed price contract.
In the past the Export Credits Guarantee Department have worked out fixed price contracts for the benefit of such firms. I am speaking without the book on this point, but I think it is a fact that so far none have been put into effect. I may be wrong about that. Certainly these contracts have been worked out and there have been a number of inquiries from big trading organisations in this country asking the Department to work something out. It may be that that will be more frequent in the future and it may be that something can be worked out which will be satisfactory.
I am under no illusions about the difficulties any more than is the hon. Member for Chippenham, but on the other hand if we are to develop this trade, as we need to develop it, it may well be that this kind of cover will be necessary. I should certainly be willing to keep the House informed about any development of the activities of the-Export Credits Guarantee Department in this direction and I hope the hon. Member for Chippenham would wish to keep a wary eye on it by way of Questions or in any other way in which he would wish to raise the matter.
Finally, the hon. Member referred to this question of unorthodox methods of trade. In answer to the hon. Member for Bucklow (Mr. Shepherd) I have said we are trying to do something at the moment. We shall be discussing it with the industry; we have no very clear


ideas of what it is going to mean, but I shall undertake to keep the House informed about any proposals we may wish to make.

Mr. Lyttelton: I think the President of the Board of Trade has been somewhat ingenuous in his explanation. I am left with very little into which I can get my teeth. First of all, he dilated, and I think rightly, upon the kind of transaction which involves the iron curtain countries, if you like that phrase, delivering to us food, grain or some imports of which we have great need against the export from this country of capital goods which naturally take a fairly long time to manufacture and export. Of course, in the particular case the export has already been made and I would not have thought that the amount of pounds sterling absorbed in this kind of guarantee would reach anything like the figure in the Clause.
After the President had given that instance he referred to the fixed price contract. I am not quite clear in my mind whether the guarantee of the escalator clause will come under this particular part of credit arrangements or whether it will come under the ordinary commercial parts. I should have thought it would come under the ordinary commercial parts. After all, the nature of these transactions is well known to hon. Members. What happens is that the engineering industry in this country, working under conditions of great uncertainty, are obliged to say to their foreign buyer, "The price which we charge you for these ten locomotives is as estimated, plus an escalator clause which would increase the price if coal went up in price." They have no means of covering themselves over coal except through Government agencies and we all know what happens with Government agencies; the price never goes down, it always go up.
We are obliged to make these contracts with foreign buyers and it is not at all uncommon in the international market for the buyer to say, "If ever I saw one, this is a pig in a poke. I do not know at what price I am buying these locomotives." These escalator clauses exist and contracts have been lost to foreign competitors who put a cap on the escalator clause saying, "Under the clause we guarantee that the price charged to the buyer will not exceed the contract price

plus, perhaps, 10 per cent." This is a form of competition with which exporters are very familiar and I must say it would be highly convenient if some satisfactory means could be worked out whereby such a risk could be insured in the interests of the country as a whole.
I am not clear whether the insurance of special risks would come under the £100 million which I think we are now discussing—or, rather, which I thought we were discussing, although we appeared to cover a very wide field of economic problems towards the end of the right hon. Gentleman's remarks. I am not quite clear whether it would come under that £100 million or under the ordinary £500 million we have been talking about. I should have thought it would come under the ordinary £500 million.

Mr. Wilson: Of course, if any scheme can be worked out which could be regarded as commercially practicable by the Advisory Council we should get it under the £500 million and be very glad to see it there, but it may well be that there will be schemes very much in the interests of the exporter and of this country and which normally the Advisory Council could not say, with their hands on their hearts, were a commercial risk. In those circumstances they would get into the second category and I have a feeling that a considerable number of these cases, if there are to be these cases, will be under the second category rather than the first.

Mr. Lyttelton: My coupon has succeeded in buying extraordinarily little from the President on this Clause. I suppose most of us at some time have gone to our fathers and said, "A little cash would come in very useful," to which our fathers have replied, "What do you want it for?" Sometimes, I have no doubt, our explanations have been rather unsatisfactory—under the heading of general disbursement, or something of that kind. That is rather the attitude of mind which the President of the Board of Trade adopts, except that instead of dealing with the odd fiver he is talking about a £200 million increase, in general, which we are not discussing, and an increase from £60 million to £100 million for his somewhat unorthodox transactions. I cannot quite make it out and he is giving very little explanation about it. In fact, he does not give as much


explanation as the young man who went to his father for some money and, when the father said, "Wine and women I suppose?" he replied, "Well, father, I must say that my expenditure on song has not been unduly high lately."
I wish the President could have given me and my hon. Friend the Member for Chippenham (Mr. Eccles) a little more information. I cannot see how the £100 million will be used. I hate a blank cheque, and now very much regret that on Second Reading I was congratulating the right hon. Gentleman on coming to Parliament again so soon after July. He was, after all, not just asking for one of those global authorities which are so popular with permanent officials, and are now becoming very popular with His Majesty's Ministers, but asking, as Ministers seem to do more and more, for something which, in all circumstances, will be quite sufficient to cover all their actual or potential needs.
I make one last appeal to the President to give us a little more into which we can get our teeth. The right hon. Lady the Parliamentary Secretary to the Ministry of Food will, no doubt, support my request on this occasion that I should get a little more sustenance out of the President of the Board of Trade; otherwise my demand on her Department may become correspondingly greater.

Mr. W. Shepherd: Like my right hon. Friend I do not feel that the President has given us any convincing reasons why he wishes to increase this sum from £60 million to £100 million. My right hon. Friend said a short time ago that it was quite likely that we were receiving more from the Eastern European countries than we were actually sending to them. It is perfectly true that that is the case. In the first 11 months of last year, if the returns of the Board of Trade are to be believed, we received from the countries behind the iron curtain about £80 million worth of goods, and we sent to them only £50 million worth. Of course, our risk in those circumstances was amply covered. If that is to be the sort of risk, I cannot see where the demand for this excessive amount comes in.
The President had some ingenious idea about a great upswing in the volume of capital goods. There may be, to a limited extent. Surely, how-

ever, the President is not telling us that suddenly he is to change the character of the trade of this country. At the present moment, on the basis of existing trade, we export a very substantial proportion of capital goods—from my point of view, too high a proportion of capital goods; but that is only demanding £8 million of this £60 million. Why, therefore, do we have a demand for £100 million? The only explanation to which I am driven is that there is something really wonderful and magical in the prospects of this North American idea. I do not know whether the President has been in touch with some of the commercial wizards and conceived a great idea for stimulating the trade of North America to an extent beyond our wildest dreams. If it is so, the Committee will be interested to know. Again, I say with my right hon. Friend that nothing the President has said today has really convinced us that there is any need to increase from £60 million to £100 million a guarantee which has been used up to now to an extent of only about £10 million.

Mr. Edgar Granville: On the previous occasion we were discussing this matter it was a foggy night, and we were trying to see invisible arguments about invisible exports. The President has been trying to lift the export curtain to the iron curtain countries. However, I think he has left all of us a little more perplexed, and that he might have taken longer to tell us what this special £40 million is about. As for his Ruritanian example, I am not sure whether he was saying that that is what happens when he concludes one of his agreements—that he goes to all the exporters who want to export machinery, capital goods, and so on, to Ruritania, and says, "Here is a good market; will you start exporting your goods to a particular country? If you do, facilities under this Bill will cover all the extra risks, including political risks." I am not sure whether that is the procedure which is to take place or which does take place; or whether those exporters, producers producing engineering equipment, and so on, go to the Board of Trade and say, "We want to export to Ruritania. Will you give us the necessary cover and insurance? Please will you negotiate a trade agreement with that country?"
I think that what we are really discussing—without, perhaps, an adequate


opportunity for the discussion of such a subject—is a Clause the title of which properly should be "Direction of Exports." I think that what the right hon. Gentleman has told us today is extremely important. However, I think he might have told us a little more, and lifted the curtain a little more, and told us whether this machinery is to be used for turning from the export of consumer goods and capital goods to countries where we cannot get raw materials, to export to markets where we can get them. I agree with the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) that before we pass this Bill, this considerable blank cheque, the President should tell us a little more of what he means.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Eccles: I cannot let this Clause pass without asking the President what sort of accounts we are to have of the expenditure of this money which, to my great regret, is now up to a limit of £100 million. The President referred to this on Second Reading, and said:
Owing to the purely political character of the transactions which Parliament had in mind when the Overseas Trade Guarantees Act, 1939, was passed, trading accounts would have served no useful purpose. But with a possible change in the character of the guarantees, however"—
the changes we have been discussing—
it may be considered desirable to have trading accounts, in which event the Treasury would be able, under their standing powers, to direct their preparation."—[OFFICIAL REPORT. 2nd February, 1949; Vol. 460, c. 1687]
I want a firm assurance that we are to have comprehensive accounts of the expenditure of the underwriting account and any losses that may be incurred. I hope we can have them.

Mr. Wilson: I think I can give the hon. Gentleman the assurance for which he asks. In the Second Reading Debate he put his finger on a point of great importance. He treated the matter in rather more detail then than now. He pointed out that in the publications which set out all the contingent liabilities of the Government there is no record at all of the contingent liability in respect of the E.C.G.D. policy. That statement is, of course, quite correct, but perhaps the hon. Gentleman has overlooked the fact that

there is a record in the Financial Accounts 1947–48, footnote (e) on page 65, which gives the outstanding liability under the Export Guarantees Acts. But he would, be quite right in complaining that that footnote referred only to commercial guarantees which are dealt with in the published trade accounts; and it is, therefore, incomplete, and does not deal with the special guarantees, about which some figures were given to him by the Economic Secretary. I think he is quite right in pressing that, with this increase in the maximum liability, and also with the greater freedom given to the Department to use the money which the Committee has been asked to vote, it is right to include a full statement of both commercial and non-commercial guarantees. I have discussed this with the Chancellor, and we have agreed that in future we shall give figures of both commercial and noncommercial guarantees in the Financial Accounts.

Question put, and agreed to.

Clause ordered to stand part of the Bill.

Clause 3, 4 and 5 ordered to stand part of the Bill.

CLAUSE 6.—(EXERCISE OF POWERS OF BOARD BY EXPORT CREDITS GUARANTEE DEPARTMENT.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Eccles: This Clause deals with the Export Credits Guarantee Department itself and its relation to the Board of Trade. This seems the right place to ask the President whether he is satisfied that this Department is adequately staffed. I am not one who wishes to see an increase in the number of civil servants but, on the other hand, I like to see a service carried out with the maximum speed and efficiency.

Mr. Wilson: I was not quite clear when the hon. Gentleman said that he was not sure whether this Department was adequately staffed whether he meant the Export Credits Department or the Department of the Board of Trade referred to in the Clause.

Mr. Eccles: I mean the Export Credits Guarantee Department itself. One is constantly hearing from traders that the staff of the Department is so short that they


cannot even issue cover notes, and a long time elapses before answers are given to inquiries as to whether risks perhaps of a rather novel nature can be underwritten. I am told that they have a rigid rule that one may only deal with the branch office nearest to one's business. Supposing a Birmingham firm does its insurance through a broker in London, it writes to the broker in London and says, "Will you get us a policy for this," and the London brokers cannot deal with E.C.G.D. in London but have to write back to Birmingham because the business has been placed in Birmingham. There are a number of small things of that sort which need looking into and tidying up. Before we part with this Clause, I should like an assurance from the President that the adequacy of the staff and the general speed and efficiency of the business will be reviewed.

Mr. Wilson: Like the hon. Member for Chippenham (Mr. Eccles) I certainly do not want to see one more official in any Department greater than the minimum required for carrying out its essential functions. So far from the Export Credits Guarantee Department having in any sense an extravagant staffing, I agree with the hon. Gentleman that that is not so. I have not seen the complaints to which he refers, either as to slowness in doing its work or excessive stiffness in the matter of the various regional offices. All the letters that I get, many coming from hon. Members, contain tributes to the speed and efficiency with which the Department is doing its work. If the hon. Gentleman has any case which he would like me to look at, I shall be very glad to take it up with the Guarantee Department. The growing decentralisation of the work of the Department will speed up its activities and make its services more generally available to traders in all parts of the country.

Question put, and agreed to.

Clauses 7, 8 and 9 ordered to stand part of the Bill.

Bill reported without Amendment.

6.54 p.m.

Mr. Wilson: I beg to move, "That the Bill be now read the Third time."
This Bill has had a very speedy and friendly passage through all its

stages since the Second Reading was passed without a Division rather less than a week ago. I want to thank the right hon. Member for Aldershort (Mr. Lyttelton) and all his hon. Friends, as well as my hon. Friends, for the welcome which they have given to the Bill. I think the fact that they have given this welcome and have allowed the Bill to go through without Amendment, apart from the few difficulties there were on one part of the Bill, is itself a very fine tribute to the work of the Export Credits Guarantee Department.
As I said quite frankly on Second Reading, this Measure provides not only a greater amount of money at the disposal of the Export Credits Guarantee Department, but also provides much more elasticity and discretion in its working. The fact that the House has given such a welcome to the Bill must be taken as a tribute to the Department, to its director, and to all those on the Advisory Council, both now and during the many years since the Council was first established nearly 30 years ago. I think that the House on the Second Reading agreed, and I am sure they will confirm this tonight, that with the great expansion which is going on in our exports there is a growing need for the services of the Department. In saying that, I am not trying to express the view that the services of the Department are entirely a function of the growing volume of trade because, as I said on Second Reading—and the right hon. Member for Aldershot agreed with me—one of the principal reasons was the unsettled state of world trading conditions.
We have seen trade expanding rapidly recently and there are one or two figures which I should like to give to the House now which will, I think, show the need for the extension of the lending powers of the Department. I am sure that the House will recall that in November and December we reached something like 50 per cent. by volume above the 1938 exports and the total value of our trade in those months was an all-time record in the trading history of this country.
I am sure that the House will be glad to know that the provisional figures which I have just had of exports in January show not only an improvement in January, which was badly affected by the Christmas holidays, over November and


December, but a very substantial improvement indeed. Exports in January were 8 per cent. greater in value than they were in November. This is not only far and away the highest figure by value which we have had, but it shows a big increase in volume over the 1938 exports. We have not the volume figures, but I can tell the House that it looks as though the figures for January are not very far short, if at all short, of the figure of 160 per cent. of the 1938 volume, which is, I think, a remarkable performance, and a tribute not only to the workers and management, the technicians and salesmen, in spite of great selling difficulties abroad, but also a tribute to the Export Credits Guarantee Department which has made so much of this possible.

Mr. Granville: Can the right hon. Gentleman give the figures for hard currency areas?

Mr. Wilson: We have no figures available for particular areas. I do not think there is much more that I need say about the Bill as I commend it to the House. We have gone through it carefully, and the House is rightly desirous of having the fullest report on the working of the Department with the new freedom which has been given to it. I think that I have given to the House the assurances that have been asked for. As new techniques are evolved, if there are to be new techniques in the guaranteeing of overseas trade, I should certainly wish to report these to the House in the fullest form, and as quickly as possible. I am sure that hon. Members on both sides of the House will be very vigilant in watching the use of the powers which have been given to me in this Bill, and it is therefore with every confidence that I ask the House to give the Bill a Third Reading.

7.0 p.m.

Mr. Lyttelton: The reason why this Bill has had such a good reception is, of course, because it is recognised in this country that exports are our lifeblood. That is a thing not always understood abroad. There are many countries whose economic position is such that they regard exports as a convenient manner of balancing surpluses, and so on. That is not the case with the United Kingdom,

and it is for that reason that although this is obviously legislation which errs on the side of being risky it should nevertheless receive our acceptance if it is designed to expand our export trade.
The preliminary figures which the President of the Board of Trade has given for January are very heartening and will be greatly appreciated in every part of the House. I only want to make this one point: that the demand in the world is quite abnormal at present, and the difficulties which face us are not generally those of selling the goods but of producing them. We must have ready at hand well tried machinery, which has now been expanded by this Bill, in order that when that demand becomes weaker we can continue to maintain at least the level of exports which we have now reached.

7.2 p.m.

Mr. Granville: The President of the Board of Trade has, quite rightly, had a very easy passage for this Bill. As he said, it not only gives the Department more money, but it gives them greater power and greater elasticity of action. I am sure that hon. Members on all sides welcome the preliminary figures he has given us this evening of a further increase in our export trade. It is extremely important that the increase should be made to the hard currency area, and the right hon. Gentleman has said that these figures will be available and classified later on. At the same time, I hope that we shall not be complacent, because I believe that we are moving into a buyers' market, a very highly competitive market abroad. We have to face this new form of hybrid competition, perhaps such as we have never known before. As the right hon. Member for Aldershot (Mr. Lyttelton) has said, this elasticity is given to the Department because not only is the export trade changing from capital goods to consumer goods, but the markets themselves are changing, and this power in the hands of the Department will allow for a loose arrangement to direct our exports at the best place at the best time

Question put, and agreed to.

Bill read the Third time, and passed.

Orders of the Day — WAR DAMAGE (PUBLIC UTILITY UNDERTAKINGS, &c.) [MONEY]

Resolution reported:
That, for the purposes of any Act of the present Session to repeal section seventy of the War Damage Act, 1943, and to make provision with respect to war damage to immovable property, goods and commodities which belonged to certain undertakings or in which both such undertakings and others had interests and to war damage causing obstruction in waterways, it is expedient to authorize—

(a) the issue out of the Consolidated Fund to any Account established under the said Act of the present Session (in this Resolution referred to as "the Act") of sums which are at any time required, and which the moneys then standing to the credit of the Account are insufficient to provide, for making payments required by the Act to be made out of the Account in respect of war damage to land, goods or commodities so related to public utility undertakings as defined in the Act as may be therein specified, or in respect of war damage causing an obstruction in a waterway or in the approaches thereto, being damage notified in accordance with arrangements in that behalf made for the purposes of consultations as to the amounts of such payments had between the Treasury or other Government departments and bodies concerned or representative organisations;
(b) any increase in the sums required to be issued out of the Consolidated Fund by virtue of section two of the Miscellaneous Financial Provisions Act, 1946, attributable to any provision of the Act (including any retrospective provision) for—

(i) applying the provisions of the War Damage Act, 1943, as to payments under Part I thereof in respect of war damage to land in relation to war damage to a hereditament occupied as mentioned in section seventy of that Act;
(ii) treating as a payment under a policy issued under the business scheme operated under Part II of the War Damage Act, 1943, and as such a payment by the Board of Trade as is mentioned in the said section two, any payment for satisfying a right conferred by the Act to receive, in respect of war damage to goods of an undertaking other than a public utility undertaking as defined in the Act which was a public utility undertaking as defined for the purposes of the said section seventy, the equivalent of the indemnity which the body carrying on the undertaking would have been entitled to receive if they had insured the goods under the said scheme;
(iii) treating as such a payment by the War Damage Commission or the Board of Trade as is mentioned in the said section two any payment by the said Commission or Board in respect of war damage

causing an obstruction in a waterway or in the approaches thereto;
(iv) excluding the operation of section fourteen of the War Damage Act, 1943, where the enactment relevant for the purposes of that section is an enactment in an Act embodying a scheme for the carrying on of any industry, or part of an industry, under national ownership or control;
(v) extending to grants payable under section thirty-eight of the Civil Defence Act, 1939, the provisions of section seventy-four of the War Damage Act, 1943, as to grants payable under section twenty-two of that Act;
(vi) treating as such a payment by the Board of Trade as is mentioned in the said section two a payment of interest made by virtue of any amendment by the Act of subsection (5) of section eighty-five of the War Damage Act, 1943 (whether in its primary operation or as applied by regulations under section ninety-five of that Act or as applied by the Act) so as to render interest at the rate mentioned in that subsection payable in the case of early settlements under or by reference to the business scheme where the date of the settlement is after the twentieth day of October, nineteen hundred and forty-six;
(vii) amending the provisions of the War Damage Act, 1943, for determining whether any plant or machinery is to be treated, in relation to any land, as land or goods;
(viii) treating as such a payment by the War Damage Commission as is mentioned in the said section two any payment, or interest on a payment, by the War Damage Commission in respect of war damage to land so related to a public utility undertaking as defined in the Act as may be therein specified, being damage affecting an interest in the land other than that of the body carrying on the undertaking;

(c) the payment out of moneys provided by Parliament of any increase resulting from any provision of the Act (including any retrospective provision) in the sums which, under Part I or Part II of the Local Government Act. 1948, fall to be paid out of moneys so provided, and of any increase in the sums payable out of moneys so provided under section eighty-two of the War Damage Act, 1943, resulting from any application by the Act of the provisions of that section it relation to any liability of the Public Work Loan Commissioners under the Act;
(d) the raising under the National Loans Act, 1939, of any money required for the purpose of providing sums issued out of the Consolidated Fund under paragraph (a) of this Resolution."

Resolution agreed to.

Orders of the Day — WAYS AND MEANS [4TH FEBRUARY]

Resolution reported.

WAR DAMAGE (PUBLIC UTILITY UNDERTAKINGS, ETC.)

"That, for the purposes of any Act of the present Session to repeal section seventy of the War Damage Act, 1943, and to make provision with respect to war damage to immovable property, goods and commodities which belonged to certain undertakings or in which both such undertakings and others had interests and to war damage causing obstruction in waterways, it is expedient to make provision for the following matters, that is to say:—

(a) for the making, in respect of public utility undertakings as defined in the said Act of the present Session (in this Resolution referred to as "the Act"), being undertakings carried on during such period on or after the third day of September, nineteen hundred and thirty-nine, as may be specified in the Act, of contributions towards the expense of making war damage payments under the Act in respect of public utility undertakings, being contributions of amounts not exceeding in the aggregate, in the case of undertakings comprised in any group of public utility undertakings constituted under the Act, the following percentage of such sum as may be fixed by the Act as the aggregate of the amounts (reckoned before making any deductions therefrom provided for by the Act) of war damage payments to be made under the Act in respect of undertakings in that group, that is to say twenty-seven and one half per cent. in the case of each such group other than a group to be constituted thereunder to comprise harbour and dock undertakings and ten per cent. in the case of the last-mentioned group;
(b) for imposing the liability to make a contribution to be made in respect of an undertaking (except in the case of contributions in respect of undertakings in any group to be constituted under the Act to comprise sewerage and sewage disposal undertakings or to comprise lighthouse undertakings) on the body by whom the undertaking was being carried on at the end of the said period, subject to any provision which may be made by the Act for determining that that contribution is to be made by another in any circumstances therein specified, for imposing the liability to make contributions to be made in respect of undertakings in any group to be constituted under the Act to comprise sewerage and sewage disposal undertakings on local authorities, their contributions as a whole being in respect of the undertakings comprised in that group as a whole, and for the determination by the Treasury of the bodies or local authorities to be liable as aforesaid and of the several amounts of their contributions with provision for giving effect to determinations made at any time on or after the first day of October, nineteen hundred and forty-eight;

(c) for the taking effect, as to the ultimate incidence of the liability for the contributions mentioned in paragraph (a) of this Resolution as between landlords, tenants and mortgagees of land so related to a public utility undertaking as may be specified in the Act, of provisions corresponding to the provisions of Part I of the War Damage Act, 1943, as to the ultimate incidence of the liability for contributions under the said Part I as between landlords, tenants and mortgagees of properties contributory under that Act;
(d) for the taking effect of the said corresponding provisions in the case of requisitioned land which immediately before the beginning of the period of requisition was land so related as aforesaid to a public utility undertaking with such modifications as may be prescribed by regulations under the Act (including regulations having retrospective effect so far as may be requisite for securing their operation as regards any year in which instalments of contributions under Part I of the War Damage Act, 1943. fell due);
(e) for the extension of the said provisions of the said Part I and of the said corresponding provisions so as to authorise the exercise of rights of recovery from and by tenants and licensees under short tenancies, and licences, as to which conditions specified in the Act are satisfied;
(f) for imposing in respect of goods of certain undertakings other than public utility undertakings as defined in the Act liabilities to pay amounts equal to the premiums which bodies carrying on such undertakings would have been required to pay if, being as regards those goods, and as regards any period of insurance for the purposes of the business scheme operated under Part II of the War Damage Act, 1943, under the obligation to insure imposed by section eighty-six of that Act, they had insured them in accordance with that obligation;
(g) for prohibiting the deduction in computing profits or gains or income for the purposes of any tax, or the inclusion for the purposes of any tax in computing expenses of management or supervision or the cost of maintenance, repairs or insurance, of—

(a) payments made in or towards the discharge of any liability or premium imposed or payable by or under the Act or the War Damage Act, 1943, or the joint operation of both, or
(b) expenditure on making good war damage or detriment caused by war damage in so far as any person has received or is entitled, by virtue of the Act or the War Damage Act, 1943, or the joint operation of both, to a payment in respect of the damage or detriment or a payment deemed under the Act to be made in respect thereof, or expenditure on making good war damage of any class specified in the Act or on measures for meeting the circumstances created by an obstruction in a waterway or the approaches thereto,

for the recovery, by assessment or additional assessment made in such manner and


at such time as may be specified in the Act, of amounts of past reductions of liability or repayments, in respect of any tax, effected by reason of deductions or inclusions of a kind prohibited; and for extending to payments under the Act provisions of the enactments relating to exceptional depreciation allowance as to payments under other enactments relating to war damage;
(h) for the payment into the Exchequer of any moneys standing to the credit of any Account established under the Act, into which contributions mentioned in paragraph (a) of this Resolution are paid thereunder, on the winding-up of the Account; of payments for satisfying liabilities imposed as mentioned in paragraph (f) of this Resolution; and of any contribution in respect of coal-mining properties made by the National Coal Board under Part I of the War Damage Act, 1943, as modified by the Act."

Resolution agreed to.

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Collindridge.]

Orders of the Day — POTATOES (GOVERNMENT PURCHASES)

7.4 p.m.

Mr. Osborne: I wish tonight to draw the attention of the House to the handling of potatoes purchased by the Ministry of Food during the past 12 months. First, let me apologise to you, Sir, and to the House for my poor voice, due to my having a bad throat; I hope that I shall be able to make myself readily understood. I have given the Parliamentary Secretary adequate notice of the three main points that I wish to discuss. In my opinion, the handling of the potato trade by the Ministry of Food during the past 12 months has been one of miscalculation and muddle almost beyond belief.
I want, if I can, to prove those statements by making four different points: I believe that the purchases made last spring were unwise; that the prices we paid were too high; that the quantities we purchased were unjustifiable; and that the administration in respect of them was absolutely incompetent. I shall support those statements by evidence from my own constituency, largely from what I saw myself, and from information gathered in the Grimsby and Immingham Docks, and also in the North Lincolnshire potato fields—though I believe that ample evidence could be obtained from other

parts of the country to support what I am saying.
About the middle of May last year it was quite clear, at least in North Lincolnshire, that we should have a huge crop of new potatoes. The Minister of Agriculture had specially asked the English farmers to produce a bigger crop this year than in the previous year, owing, of course, to the damage that had been done by the bad weather during the previous year. The farmers, as always, responded, and it was obvious to anyone who knew the slightest thing about it that we should have a wonderful potato harvest. At that time, just before the new crop was ready to be gathered, the Grimsby Docks were choked—and I use that word advisedly—with old potatoes which the Ministry was importing from Holland, Denmark and Poland. There was at one time, on Grimsby Docks alone, over 6,000 tons of old potatoes that had been so imported. I myself went into the heart of my constituency to Ludford aerodrome, and there saw what looked to me to be tens of thousands of bags of potatoes that had been imported, then brought by rail from Grimsby to Market Rasen, and then taken by road transport from Market Rasen to Ludford and stored there. Yet all round this huge hangar there were fields full of new potatoes ready to be gathered.
It seems monstrously unwise to be importing these old potatoes from the Continent when there was such a good English crop ready to be gathered. I hold—and I hope I shall be able to substantiate it—that the Ministry of Food were wrong in their calculation that those imports would be necessary. Of course, the Minister will probably say that this was a form of insurance; that something like this had to be done. My comment, before that alibi is put up, is that it was over-insurance; and it was unnecessary insurance, as is proved by the facts.
Of the incompetent handling of these imports I should like to give three specific examples. On 19th May a small ship called the s.s. "Thyra" came into Grimsby Docks from Denmark with 1,000 tons of potatoes aboard, but the docks were so full of potatoes that there was no more available storage space. The ship had to be turned round and sent over to Germany. Even the hatches were never


moved; the boat was just turned round and sent across to Bremen. What the potatoes were like when they got there, goodness knows. The important thing is that surely the Ministry of Food knew before that boat sailed from Denmark that the port of Grimsby was already choked with potatoes and that there was no further storage space; surely they could have wirelessed across to Denmark and told them "Take these potatoes straight into Bremen," instead of first bringing them across to Grimsby and then turning the boat round and having them taken back almost to the point whence they had started.
On 24th May another boat, the s.s. "Ardgryfe," was sent to Grimsby by the Ministry of Food, and it there loaded 800 tons of these surplus old potatoes from the docks to take them to Hamburg. Only those who saw the potatoes could believe the rotten state they were in: they were dripping with moisture; they had been left so long that they were sprouting, and the sprouts were as much as five inches long. In order to be able to get them aboard, the dockers had to use forks to separate the various bags. What was the state of the potatoes when they got to Hamburg I do not know. Two days later two other vessels were sent to the Port of Grimsby, on Ministry of Food instructions, to take some of these potatoes away, we suppose, to the Continent, and, after waiting in the port for a day or two, they were sent away empty. Confusion there was, but whose was the fault I do not know. This substantiates that what happened in my constituency was gross mismanagement and mishandling.
On 1st June a Polish vessel named the "Lydia" came into the port with another 1,700 tons of potatoes. It was more than a case of coals to Newcastle. I do not know how to express it. I do not know why somebody in the Ministry did not say, "We already have enough. We do not know what to do with them. Please take them somewhere else." Somebody mishandled this job very badly and it ought to be looked into.
As regards the price paid by the Ministry, it is believed in the trade that, allowing for the transport and warehousing, as much as £26 a ton was paid for these Polish potatoes. Only a few months earlier there had been appeals in the

British Press for funds to feed people in starving Europe, and Poland was one of the countries supposed to be on the verge of starvation. At least, they knew when the potatoes were over, and they were ready to be rid of them. For what they were ready to be rid of we were prepared to pay up to £26 a ton. Constituents of mine at the same time had potatoes which they were willing to sell at £4 a ton. It does not seem good planning to purchase potatoes from abroad at £26 a ton when they are available at home at £4 a ton.
I ask the right hon. Lady the Parliamentary Secretary to the Ministry of Food to think of the position from the shipping angle. Here we had small ships in and out of the port, making useless journeys at a time when shipping, especially small shipping, was very scarce and very valuable. I am told by some of my friends that for a short period the imports of butter and cheese were actually held up because these potatoes were doing these useless journeys backwards and forwards across the North Sea. There were some hundreds, if not thousands, of tons of these potatoes in this one port. How many there were in ports all round the country I do not know. These potatoes were left to rot. A certain quantity was sold at a lower price, but the residue was so had that the potatoes could not even be given away.
I should like to ask the right hon. Lady to confirm that the Ministry of Food had to pay outside contractors to take this refuse away. I know for a fact that though the dock workers belong to a very powerful union and are very jealous of who should come and work at these docks, they refused to handle the potatoes because they smelt so badly, and outside contractors had to be brought in to remove this refuse, which cost £26 a ton. If that is not scandalous I should like to know what is. Furthermore, I am informed—I should like this to be confirmed—that the potato merchants who were in touch with the farmers, gave the Ministry the advice to end potato rationing some weeks, if not a month, before it was actually ended. If potato rationing had been ended a fortnight or a month earlier, then the waste would not have taken place. This was happening while people here were being rationed


and could not get the amount of potatoes they wanted. It seems to me to be a most extraordinary state of affairs.
Lest the right hon. Lady should think that I am exaggerating, I want to quote some replies which she herself has given me in the past few months. On 22nd September I asked in the House what was the cost of the potatoes that had been imported, and she told me that, allowing for all costs, it was £18 14s. 6d. a ton. At the same time the House was informed that something like 2,500 tons of those potatoes were sold to the farmers at about £10 a ton. We hear a great deal about Socialist planning, and how much more clever the Socialists are in running business than are the old-fashioned Tories, who believe in the bankruptcy court and in profit motive; I cannot see how it can be called good planning to purchase potatoes at £18 14s. 6d. a ton and sell many thousands of them at £10 a ton. Furthermore, the right hon. Lady admitted that 3,500 tons of these potatoes were actually sold at less than £3 a ton.
That is the sort of business which ultimately gets the ordinary individual into the bankruptcy court. The only trouble from the national point of view is that it cannot get the Ministry of Food there. This was reminiscent to my constituents of happenings with coal in the same port 12 months earlier. It was admitted in 1947 that we had been importing inferior American coal at an average price of 95s. a ton, and from the same port we were exporting good English coal at 55s. a ton. That is the new form of doing business and that is the way to national poverty. If this is Socialist planning, first in coal and now in potatoes, no wonder we are going hungry, and having to go cap in hand to our good friends across the Atlantic to help us.
The second point I want to make is that, despite this experience, in the spring the Ministry of Food went to Eire and purchased another 50,000 tons of potatoes. Later they discovered that they would not require them, and they said to the Irish farmer, who is now no longer a British citizen, "If you take the potatoes back we will give you £6 a ton." We recognised how bad was

the bargain and we paid an extra £6 a ton to get out of our mistake. Again, if that is planning it would be a good thing for the nation if we ceased to plan. The "Daily Mail" of 3rd January published this from its correspondent:
This contract, part of the Anglo-Eire Agreement, was made because the Ministry expected a shortage of potatoes in Britain this winter.
How on earth could the Ministry expect a shortage of potatoes when the Ministry of Agriculture had asked the farmers to do their utmost to supply the country with an enormous crop? The farmers have never let the nation down. If the Ministry anticipated a shortage they could only believe that the Ministry of Agriculture would not be able to get their job done properly. It is scandalous that this second contract was entered into. The "Daily Mail" correspondent went on to say:
This miscalculation is the result of bulk buying, and it looks as if the Ministry of Food is going to lose a packet.
Unfortunately, it is not the Ministry of Food which is going to lose a packet, but the taxpayers of this country. We shall never get taxation down while the taxpayers' money is thrown away in such a ridiculous manner.
Having brought these facts forward, I should like to remind the right hon. Lady of another piece of information she gave to me in this House on 19th January of this year, when I asked how many tons of potatoes we had over our normal requirements. This extraordinary answer was given by the right hon. Lady herself on 19th January. She said that there were 275,000 tons of good English potatoes that were surplus not only for human consumption but as cattle feed. Yet she had been over to Ireland and had bought 50,000 tons—or her Department had done so. I do not blame the right hon. Lady herself. Her Department did not believe that the Ministry of Agriculture could do its work.
We do not know what to do with these 275,000 tons of potatoes. The Ministry of Food, in their quandary, are having to send them to the factories to be made into powder for cattle food. What is this costing us? It is costing us, on the admission of the right hon. Lady, £9 per ton, and the loss on this transaction is £2,500,000. Is that good Socialist planning? Is the right hon. Lady proud of it?


The sooner we get rid of that sort of planning the better. It is an example of muddle that is almost unbelievable.
My third point is that all this muddle is being conducted for the nation by a Potato and Carrot Division. The President of the Board of Trade said a few minutes ago that not one official more than is absolutely necessary to carry out essential work should be retained. The right hon. Lady told me, in answer to a Question on 20th September last year, that the Potato and Carrot Division had no fewer than 72 offices in the country employing about 1,600 people at an annual wage of about £500,000. They are occupying houses that are badly needed for the homeless. I know one not far from where I live. The house used to provide accommodation for quite a large family and it could be better occupied than it is today by the Potato and Carrot Division. That department is not only futile and doing its work badly, but is a waste of public money.
Hon. Members opposite have always said that it is their policy to retain controls only until such time as supply catches up with demand. They have always protested that they do not wish to retain controls for control's sake. They say that once supply has caught up with demand, they will abolish control. Here, in potatoes and carrots, supply has not only caught up with demand but has overwhelmed it. If ever there was a case for abolishing any department and its control, here it is. What is the Government's policy about this matter? Are they going to stick to what we always say, or to love controls for the sake of control?
My fourth point is one upon which I did not give the right hon. Lady notice. I beg her pardon for not doing so. A year ago the Ministry of Agriculture asked the farmers to grow more onions. One of the young, intelligent and progressive farmers in North Lincolnshire has grown 1,000 tons at the specific request and urging of the Ministry of Agriculture. He has been able to sell only 400 tons and he has just had to throw 600 tons on the foreshore of Lincolnshire, and wait for them to be washed into the sea. In the same area, French onion sellers go round offering French onions to the people who would otherwise have bought onions that were grown in their own country. Surely

the right hon. Lady cannot claim this to be good planning. If planning is to be of any use at all to us, it must be good planning. I am sure that the right hon. Lady would not wish to retain bad planning. If any further evidence is required on this point, I would advise the right hon. Lady to look at the back page of "The Times" today, which shows a picture of leeks being ploughed in because there is no market for them. There has been no liaison between the Ministry of Agriculture and the Ministry of food, or if there has been a liaison it has not been good.

Mr. Fernyhough: Does the hon. Gentleman suggest that the Ministry are responsible for the leeks? Is not the private individual farmer responsible because he has grown stuff for which there has been no sale?

Mr. Osborne: I am glad to have had that question from the hon. Gentleman. I can tell him that this was done at the specific request of the Ministry of Agriculture and that the farmers have gone out of their way to produce the leeks. Now other departments say to him: "What fools you were to do it." The Government do not know how to plan properly. How do they expect us as a nation to recover as quickly as we ought to? The evidence from my constituency could be multiplied all over the country. It shows an indescribable lack of planning, and it shows incompetence and muddle.
When I asked some of my constituents for some of these facts they were very chary of giving them to me. They said: "We are largely in the hands of the Ministry of Food and the Ministry of Agriculture these days. If we give you too much information you will get up in the House of Commons, and we shall get the backwash of it." I am putting that point to the right hon. Lady. I know it is not her desire, but her officials can take the "mike" out of those people. That is the industrial Gestapo of which my right hon. Friend the Member for Woodford (Mr. Churchill) spoke in 1945. It is a menace. It seems to me that the Ministry of Food, while they may have certain major functions to perform for many years to come, should shed as quickly as possible that which is not necessary. They should cut their activities down as speedily as possible. I claim that the Potato and


Carrot Division has long outlived its usefulness.
I finish on this note. Hon. Members opposite often say to us: "As Conservatives you are always talking about ending controls. What control would you take off?" That is the challenge that is used at elections. It will be used in the next two by-elections. My answer is I would start here. This is the one I would start with: I would end the Potato and Carrot Division, which is costing us 1,600 workers and a half a million pounds in wages. It is occupying houses that the homeless ought to have and it is doing its job badly. If we handed the job over to a private trader, it would be done much better, to the great benefit of the nation.

7.30 p.m.

Mr. Kenyon: One would think, from the remarks of the hon. Member for Louth (Mr. Osborne), that only the Labour Government had been concerned with controls. I would remind him that before the war the Potato Marketing Board exercised controls upon the farmer under a Conservative Government. The control was so stringent that if the farmer grew more acreage than a certain basic acreage which was fixed by the Marketing Board, he was fined £10 per acre. If a farmer had plenty of land on which he wished to grow potatoes for the people, he was limited by the controls, the rigorous and totalitarian controls placed upon him by a Conservative Government. Not only was he punished, but he had to pay a heavy fine. That was under a Conservative Government.
One would also think, from what the hon. Member has been saying, that it is only under a Labour Government that a farmer or the people sustained losses on potatoes. There have been losses on potato growing ever since the farmers of this country began to grow potatoes. There have been fluctuations. What used to take place in agricultural practice was that farmers of this country had to speculate, to gamble. They laid down an acreage of potatoes. Sometimes it was too large or we had an exceptionally good season and a record crop. When that crop was marketed, the price was so low that it did not pay the farmers for what they had done, and the following year they cut down their acreage tremendously. Then, when there was a smaller

acreage, there was a bad growing season, with the result that the market ran short of potatoes.
That has been our experience all through the years. No one can plan for Nature. We can lay down 1,400,000 acres of potatoes one year, and the farmer will not receive what in another year he will get from a million acres. The Ministry of Food have been perfectly right in trying to plan in order to safeguard potato supplies for the people. What would the hon. Member have said if, after the Ministry of Food had bought those potatoes in Eire, we had had a bad crop in this country in spite of our acreage? In that event those potatoes would have been most useful. The only reason the hon. Member has been able on this occasion to bring up this matter against the Government is because we have had an excellent crop and a tremendous acreage. Because the two have coincided, he has been able to make a charge of wastage.

Mr. Osborne: The hon. Member must realise that the enormous acreage of which he speaks was known a year previously. It was planted at the specific request of the Ministry of Agriculture.

Mr. Kenyon: The enormous acreage was certainly known in advance, but the hon. Member, who comes from an agricultural area, must agree that the enormous crop was not known in advance. It is the crop that make the difference, not the acreage. When the hon. Member talks in this way about the big mistake which the Ministry of Food have made, he is simply "talking through his hat." The Ministry have been planning, and if they have had a loss that is only what used to occur before planning took place. Who bore the loss in those days? It was the farmer, because he had a good crop and a good acreage and could not sell his potatoes, or had to sell them at any price. The shopkeeper also bore the loss. The difference is simply that with bulk buying the loss falls upon the Government instead of, as with private buying and private trading and no planning, the loss being spread over a large number of farmers and shopkeepers.
Another factor which we have to take into account in this matter of planning by the Ministry of Food is that owing to the shortage of feedingstuffs a tremendous tonnage of potatoes is being used today by farmers for dairy cattle, pigs and


poultry, to a far greater extent than was ever the case in the past. Further, when the Minister of Agriculture appealed to farmers to grow more potatoes he also appealed to them to increase tremendously the pig stocks of this country, knowing full well that if they did so they would have to use a huge tonnage of potatoes, as in these days potatoes form the greater proportion of the pig food.
The result is that the Ministry of Food have to plan not only for the people but also for the tremendous tonnage of potatoes used by the pig men and dairymen. One of the reasons for this shortage of potatoes a year ago, as the hon. Member well knows, was the tremendous tonnage of potatoes used by farmers for their cattle. Everyone knows that in planning with nature one can never be certain, no matter what one does. Therefore, in order to guarantee, potatoes for the people, it is best to err on the top side—[Interruption.] We guaranteed the acreage, but as I keep repeating, we cannot guarantee the crop, as the hon. Member knows full well. In the light of the experience of the previous year, the Minister was perfectly right in making the purchases he did in order to safeguard potato supplies for the people.
I hope that the Minister will deal with some of the things which have been said. When the hon. Member for Louth gets up to speak, he always does his utmost to bring discredit upon the Minister. When he makes charges that the Ministry will make the farmers, I think he used the phrase "feel the backwash," because they gave him information, it is a descent to something which ought not to be uttered in this House. It is a reflection upon the Ministry which should certainly be answered. We are used to hearing these things from the hon. Member, but sometimes they go too far. Here is a case in which a reflection has been made upon officials of the Ministry which should certainly be withdrawn. I hope that the Ministry will go forward with the planning which they are doing. They are safeguarding not only the food of the people but the food of the animals, which is something which hon. Members opposite always fail to recognise in the speeches they make.

7.38 p.m.

Mr. Butcher: It has been suggested that the right hon.

Gentleman should be aware of the enormous crop available this year. I will give way for a moment if the hon. Member can tell me what is the estimated average yield this year. So far as I know, those figures have not yet been published anywhere and, at the moment it is purely a matter of guesswork, in which the hon. Member's guess is as good as mine, and no better. The hon. Member was right in showing considerable sympathy for the right hon. Lady. Since she has occupied her position at the Ministry of Food I have always felt that she has had a most difficult task. No one has been more patient in her attendances at the House to reply to matters raised upon the Adjournment, attendances which must now be running well into three figures. The right hon. Lady must ask herself, "Why should I, of all persons, have to be here night after night when other Parliamentary Secretaries can go home?"

Mr. Scollan: Hungry children.

Mr. Butcher: The hon. Gentleman suggests hungry children. That is the main complaint against the Minister of Food; and, indeed, the reason why the Parliamentary Secretary has to answer so many Adjournment Motions is because of the sheer incompetence of the Minister with whom she is associated. Some time ago I raised in this House the question of potatoes, and I suggested that the potato ration had been removed too late. My hon. Friend the Member for Louth (Mr. Osborne) also suggested that it was removed too late. I ask myself why the right hon. Lady should be required to answer, on Adjournment Motions, questions about potatoes. Why is it that Lincolnshire Members, from that area where so many potatoes are planted and harvested, have had to raise this question?

Mr. Burden: It is because the Opposition want to curry a little popularity by probing these things.

Mr. Butcher: The idea would not cross my mind. To the hon. Gentleman, who in other quarters, I call my hon. Friend, I say that the Opposition are free to direct their attack at the weakest link in the Government. Certainly that is legitimate political strategy. Here we have an incompetent Minister, and the Opposition are doing right in directing their attack upon him.
What is the position with regard to potatoes? I propose to ask the right hon. Lady certain questions. What is the ascertained loss at the moment on the operations of the Potato and Carrot Division of the Ministry of Food for this season—let alone the last season? This branch of the right hon. Lady's Ministry is going to be one of the most extravagant that this country has ever seen. My hon. Friend the Member for Louth put forward a case concerning the importation of potatoes into this country, with chapter and verse, ships and tonnage, which I thought was almost unanswerable. The right hon. Lady may say that that was a form of insurance. Of course, one can insure against road accidents by stopping in bed all the days of one's life. Over-insurance is as stupid and improvident as under-insurance. There is a medium way in all these things.
There is no doubt at all that the Ministry of Food panicked. The rationing of potatoes came to the people of this country as such a shock, that the Minister knew that he was absolutely certain to lose his job if there was ever again a shortage of potatoes while he held office. As a result, he went buying potatoes all over the place. He persuaded the Minister of Agriculture to get the largest acreage planted that could possibly be done, and the farmers nobly responded. Now there are too many potatoes and they are being converted into feeding-stuffs. It is a very good thing that that is being done. I have a factory in my own constituency, but this is no new thing; it was happening before the war. If hon. Members opposite are claiming credit for that, I would remind them that that factory was not erected during the lifetime of this Government.

Mr. Scollan: The hon Gentleman said that that was happening before the war. Is he aware that many people in this country could not buy sufficient potatoes, while at the same time they were being fed to pigs because they could not be sold?

Mr. Butcher: All I would say is that the vast majority of working people in this country were working for rates of wages which had been settled by their trade unions in negotiation with their employers. Is the hon. Gentleman asking me to believe that the representatives of

Labour were in such a position that they could not secure a wage for the workers which would enable potatoes to be purchased? It is complete nonsense.

Mr. Scollan: The hon. Gentleman has forgotten that there were 2,500,000 unemployed in the pre-war days, due to the stupidity of the Government which then ruled this country.

Mr. Butcher: If the hon. Gentleman wants figures of the number of unemployed, I shall be happy to quote the figures for 1932.

Mr. Fernyhough: Under a National Government.

Mr. Butcher: It was the period immediately following the fall of the Labour Government in 1931. To suggest that people in this country had not the money to purchase potatoes is perfectly ridiculous. I advise hon. Gentlemen opposite to "ask their dads" when they get home. Is any hon. Gentleman opposite prepared to stand in front of an audience of housewives and say, "Ladies, you may have forgotten that there was a period in your lives when you were unable to purchase potatoes"? Anybody who did so would be laughed at.

Mr. Kenyon: Is the hon. Gentleman saying that the housewife is completely ignorant of the industrial conditions of the country at that time?

Mr. Butcher: That question is addressed to me; nobody will publicly plead ignorance; nor, indeed, would anybody admit it for a moment. I suggest that hon. Members opposite are trying to rely on party points because they dislike the bundle of facts which were carefully documented by my hon. Friend the Member for Louth.
My hon. Friend raised a point which merits very careful consideration, namely, has the Potato Division of the Ministry of Food outlived its usefulness? I think that to a very large extent it could very well be wound up. It was created as part of the wartime Ministry of Food, at a time when we were unable to know whether it would be possible for ships arriving at these shores to be used for the transport of grain and potatoes. I do not believe that the elaborate mechanism now in force is in any way necessary. The real cause of all this muddle which is constantly taking place


in regard to foodstuffs is the lack of liaison between the Minister of Food and the Minister of Agriculture.
I said a little while ago that I thought that the Minister of Food was certainly the most incompetent Minister in the Government and the weakest link in a thin and slender chain. But I have a great respect for the Minister of Agriculture. He is a good man struggling against adversity, the adversity on the whole being his Cabinet colleagues. I believe the farmers of this country would do well if, in the Cabinet counsels, the voice of the Minister of Agriculture were to prevail and not the voice of the Minister of Food.
As an example, I would refer to the subject of onions which was touched on by my hon. Friend the Member for Lough. The mishandling by the Ministry of onions is a tragedy. Ordinary people, smallholders in my constituency occupying half an acre or one acre, have planted their onion beds. They have been weeded by the men when they have finished their ordinary work as tractor drivers. They have been harvested by the men's wives. They have been dried to the best of the skill and ability of these men, and now they are rotting, because the shops in this country are glutted with imported onions at a time when this Government brags of its capacity to plan. Planning might be a good thing, but if we are to plan, for goodness sake let us have competent planners. I specifically exempt the right hon. Lady from my criticism; all my sympathies are with her because she is a far more competent Parliamentarian than her chief, which is why she is here tonight and he is somewhere else—

Mr. Osborne: That is not saying a lot.

Mr. Butcher: —but the Minister of Food is the most incompetent Minister in a pretty poor Administration.

7.50 p.m.

Dr. Barnett Stross: I rise only because of what the hon. Member for Holland with Boston (Mr. Butcher) has just said. An interesting experiment testing this complaint was carried out in 1936 at Bishop Auckland. There was a local glut of potatoes, and it was recognised that many unemployed in the area were living on a very poor diet. The local authority had the potatoes brought

to centres and offered them at a cheap rate if people cared to come and take them away. The price was 4d. or 5d. a stone. The result was that the consumption of potatoes in that area at once doubled. That effectively answers the hon. Member.
I felt that the hon. Member spoke with some partisanship. One does not blame him, for he was being somewhat heckled. However, it struck me that his argument was rather like one which was accepted in pre-war days, when a glut of anything was always looked upon as a threat to the country. When we had a lot of food it seemed that people were unable to get as much as they got when a moderate amount was available. I remember seeing in that great Sunday newspaper, the "Observer," in September, 1939, just about the time when war broke out, the caption:
Holland's magnificent harvest. Blow to world recovery.
That was the way we thought. There was a little of that in the hon. Gentleman's attitude, a suggestion that we had no right to plan for plenty, because if we had a little too much, as a result of the soil being fertile and fruitful and nature being grateful for our care, we had done something reprehensible.

Mr. Osborne: What about the farmer I mentioned who produced 1,000 tons of onions at great toil and cost and has had to throw 600 tons on the foreshore as waste?

Dr. Stross: I believe that the way to handle a glut of that kind would be to allow prices to fall, and the crop would then be absorbed, hut that would not be very popular with the farmers as a class. None the less that ought to be very carefully considered. Freedom of enterprise which allows prices to fall will always meet with my approval. Freedom of enterprise which takes advantage of scarcity so that people cannot get food at all unless they have a high income does not meet with the approval of anyone on this side of the House.
In the years before the war many of the miners in my constituency and in North Staffordshire as a whole had only two or three days work a week. In those days I knew that well because I was the medical adviser of their organisation. It was not at all unusual to find a magni-


ficent craftsman bringing home 29s. or 30s. a week. When he had paid his rent and cared for his wife and children, there was practically nothing left. It was considered that the very cheapest diet in the world on which one could live and retain health was three pounds of bread a day, four ounces of cabbage or one orange or two small tomatoes, a teaspoon of cod liver oil and four ounces of the cheapest cheese—that which is often referred to as "mouse-trap" cheese. That gave a man the energy and heat with which he could do his daily work. It amounted to approximately 3,000 calories, which is roughly what we average today, and a good deal less than the miner gets today. It contained vitamins and mineral salts in sufficient quantity to stave off premature old age and disease. That diet cost over 5s. per head a week and many of the men had far less than 4s. a week for food alone, if they were working on half time or had many children. There have indeed been people who could not afford potatoes.

7.55 p.m.

Mr. Douglas Marshall: When the hon. Member for Hanley (Dr. Stross) remarked about the freedom of prices to fall, he must have been particularising and not generalising, because the House as a whole agrees with the principle of guaranteed markets over a period of time subject to annual price reviews. Without this, the farmer would not have stability. I want to take this opportunity of saying how much I agree with the hon. Member for Holland with Boston (Mr. Butcher) on the difference which he has noted between the attitude of the Minister of Food and that of the Parliamentary Secretary.
I sincerely trust that the Parliamentary Secretary will be able to reply to my very short point. It relates to the removal of the potato crop. The Ministry of Food guaranteed to take the total production of potatoes at a price. It is true that there is a very large crop, and they are willing to remove any crop which appears at any time to be deteriorating in value. I have called on the Parliamentary Secretary in order to overcome some difficulties in my division and she has certainly given consideration to the points I made at that time. However, I

am concerned about the situation which arises when it is necessary for a crop to be removed, not because it is deteriorating but because it is, taking up space necessary for the production of further food.
In Cornwall and the West of England generally the time has come when it is vitally necessary to remove part of the potato crops so that other foodstuffs can be grown. In the last fortnight I have had a letter from the Ministry saying that they can do nothing in a certain case. This is an extremely serious matter. It is absolutely vital that certain potato crops in Cornwall should be cleared. I hope that the right hon. Lady will see fit to give an assurance that she will once more look into this matter and make every possible endeavour to remove crops so that the farmers can proceed with the further food production which is so urgently needed.

7.59 p.m.

The Parliamentary Secretary to the Ministry of Food (Dr. Summerskill): It is the first time that I have heard the hon. Member for Louth (Mr. Osborne) apologise for his voice and the fact that it would not reach me on this Bench. I can assure him that I bear him no malice because he raised this subject tonight, and if he would like some medical advice afterwards, I am quite prepared to give it to him.
I do not deny the fact that all the potatoes brought into and produced in this country last year were not used for human consumption. Hon. Gentlemen opposite, in concentrating on the details of our transactions, have failed to look at the whole picture. The picture was very fairly put by my hon. Friend the Member for Chorley (Mr. Kenyon) who is a practical farmer. The hon. Member for Louth is not a farmer but the hon. Member for Holland with Boston (Mr. Butcher) is. I wonder what hon. Members opposite who are farmers would have done had they been in the position in which the Ministry found itself at the end of 1947? It will be remembered that bread was rationed, that in November. 1947, we had to ration potatoes, and we had the responsibility of feeding 50 million people. Both bread and potatoes are staple foods and are interchangeable and so, in December, when we were reviewing our potato policy, the action we


took was in the light of these facts and in view of the uncertainty as to whether we could take bread off rationing in the near future.
I emphasise that it was during December that we gave the matter our careful consideration, because at that time the hon. Gentleman must remember, directions for cropping had not been given. We knew we should like 1,400,000 acres, but directions had not been given. The yield was totally unpredictable. Everybody on both sides of the House tonight has agreed that the potato crop is a variable one. Hon. Gentlemen opposite would have helped tonight if they could have told us how we can control that lady Nature.

Mr. Osborne: She will not be planned.

Dr. Summerskill: That is the difficulty. It is Nature who has the final word. As I was waiting for this Adjournment tonight, I was having a word with my hon. Friend the Joint Parliamentary Secretary to the Ministry of Supply who is a great potato producer. Apparently he produces 18 varieties and he told me that he won 40 first prizes last year. He thinks he knows more about potatoes than anybody in the country, and he said that it is absolutely impossible to anticipate the potato yield.
There we were in December, 1947, bread and potatoes rationed, the cropping directions not given, ignorant of what the yield would be, and quite incapable of anticipating the weather, yet knowing that we had 50 million people to feed. What would hon. Gentlemen have done? They would have looked round and said, "Even if we eventually have surplus potatoes, we must now get some from somewhere. We must not gamble, it is too risky." So with that in mind, we looked across the Channel and imported potatoes because, apart altogether from the general position, we felt there might be a gap between the old and the new crop when we could not maintain the three lb. ration.
I have mentioned this before, but hon. Gentlemen opposite know enough about my Ministry to realise that we are advised by the same experts on potatoes as advised the Coalition Government.

Mr. Osborne: Conditions are different.

Dr. Summerskill: Stomachs are still the same size—

Mr. Osborne: I doubt that.

Dr. Summerskill: —and the political colour of a Government makes no difference to appetites. We took the best advice we could, and because we were told that there might be a chance that we would not be able to bridge the gap between the old and the new crop and maintain the three lb. ration and because bread was rationed, we decided to import. We bought potatoes from Denmark. Poland and Sweden. Many of them came to Grimsby and Immingham.
I have made inquiries about the allegation of potatoes being in such a rotten condition that men were unwilling to handle them. I do not say that the hon. Gentleman is guilty of an inaccuracy, but I did get in touch with the Transport and General Workers Union because these men are well organised and I thought they might have complained to their officials. I could not trace any complaint. It may be that an individual man expressed his displeasure at having to do that job. I am told that the smell is extremely horrible, and no doubt none of us in the House would like to do the job. I looked up the figures and found that in those two ports the percentage of potatoes which deteriorated to such an extent as to be unsaleable was 2.9 per cent.

Mr. Osborne: What was the weight?

Dr. Summerskill: I have not got those figures here.

Mr. Osborne: That is important.

Dr. Summerskill: The hon. Gentleman can work that out quite easily. It was 2.9 per cent. of the potatoes stored at Grimsby and Immingham, which amounted to 11,232 tons.
The hon. Gentleman talked about Polish potatoes. It happened that the Polish potatoes were better keepers than the Danish and the others. The potatoes from Germany, Holland, Denmark and Poland were delivered for the most part in April and May. This is where Nature stepped in. Last year we had a warm, delightful, early spring, and the early potatoes came along in the first week in June. Not only that, but the warm weather caused the old potatoes to deteriorate quickly. We could do nothing in those circumstances, and the hon.


Gentleman cannot blame the Ministry for that. Immediately we considered how best to dispose of these potatoes. Rationing was removed on 30th April. I think it was the hon. Member for Holland with Boston who said he advised that rationing should end sooner.

Mr. Osborne: No, I advised that.

Dr. Summerskill: The hon. Gentleman must realise that in the light of the two staple foods being rationed at the same time, we had to consider carefully the date of derationing.

Mr. Osborne: But it was an extraordinarily warm spring and it was obvious, even to Ministry of Food officials, that the early potatoes would be good and plentiful and would be here early. Surely that was taken into consideration?

Dr. Summerskill: We derationed at the end of April and the new potatoes did not come along until the first week in June. Then arrangements were made immediately to send 43,000 tons of old potatoes to Germany; 20,000 tons at least were sent direct from the exporting countries, and another 24,000 tons were sold for stock feeding here. The hon. Gentleman asked me why we did not divert all these potatoes immediately. We tried to divert as many as possible, but it is not always easy to divert a cargo from a certain point.
The hon. Gentleman who accused my Department of gross negligence should make a note of the following figures. The total quantity thus disposed of represents about four days' supply of potatoes, or less than 1 per cent. of the total annual supply. The average disposals for stock feed and factory use in the period 1940–41 and 1946–47 were 279,000 tons, or 3.5 per cent. of the annual total supply in that period; which bears out what my hon. Friend the Member for Chorley said, that in the past there was always a waste of potatoes and during the years of the Coalition Government 3.5 per cent. were disposed of as against 1 per cent. last year. The hon. Gentleman asked why these shipments were coming in rather late and why we did not again divert them. As I have already explained, these arrangements were made

in December, January and February. The last shipment arrived, on 7th June.
So far as the purchase of potatoes from Eire was concerned, I agree that if we had only recently entered into that negotiation it would have been stupid; but the negotiations with Eire took place in December, 1947. At that critical period it would have been quite wrong for us to gamble with the people's food. Had we done so, hon. Gentlemen opposite would have been quite right to charge us with negligence. It was in that December, 1947, that we looked towards Eire. Representatives from my Department went to Eire and asked whether they could supply us with potatoes in 1948 and 1949. It was then that the contract for 50,000 tons was made.

Mr. Butcher: Does the right hon. Lady mean to say that before it was known what acreage would be planted, and what would be the response to the appeal of the Minister of Agriculture, she was making contracts in advance for delivery in 1948 and 1949?

Dr. Summerskill: In December, 1947, as I have tried to explain, things were very difficult. We could not with any certainty gauge how many potatoes we might get from the Continent. Suppose we had had a very bad season. When I first came to the Ministry of Food I felt that if there was one commodity on which we could always rely it was potatoes. The whole House, in fact, was surprised when we had to ration them. Again, it was because of the bad season.
Suppose there had been another bad season in 1948 or that the negotiations with the Continent had fallen through, and that those countries had been unable to sell to us because of having to feed their own people first. It was because we had all this in mind that we thought it wise to go to our neighbour Eire and say, "Can you undertake to send us these potatoes?" We have had to dispose of them and the hon. Member for Louth is quite correct. We have sent 30,000 tons to the factories in Eire to be made into alchohol.
The question of yield has been raised. The yield, of course, matters more than does the acreage. In 1948 the average yield per acre in Great Britain was 7.9 tons, compared with an average yield of 7.1 tons for the preceding 10 years. The


corresponding figure for 1947 was 5.9 tons. Had the 1948 yield remained at that figure we should have been fully justified in making these contracts. Even so, we might still have been short. It is in the light of these facts that I feel that the House must agree that the Ministry entered into these negotiations fully alive to the fact that we might have potatoes on our hands, but determined to go ahead because, as hon. Gentlemen have rightly mentioned, we regarded this policy as an insurance. We have paid a very high rate for it, but it was necessary to do so because we were insuring against hunger.

Mr. Scollan: Very cheaply.

Dr. Summerskill: So far as the future of the Potatoes and Carrots Division is concerned, it is necessary for this Division to operate as long as the guarantee for potatoes and carrots continues. The hon. Member for Louth is correct when he mentions that a number of the personnel—about 400 I think—do certain work for the Ministry of Agriculture.

Mr. Osborne: 300.

Dr. Summerskill: Yes, 300. Another 150 are engaged on work which is paid for, I believe, on a Vote other than that of the Ministry of Food. The hon. Gentleman will be gratified to learn that we are considering what the future of this Division should be. We are taking into consideration all the work they have done and might be called upon to do and whether it should be reorganised. I cannot say more at present.

Mr. Osborne: Cannot the hon. Lady give an undertaking that it will not merely he reorganised but that it will be closed down and that that labour will be used in productive industry, for which the Economic Secretary is continually crying out? Why cannot we be assured that it will be abolished altogether?

Dr. Summerskill: I must remind the hon. Gentleman of the nature of the work. He will remember that a guarantee was given for carrots, that at the beginning of the war there was a shortage of

foods—liver and so on—which provide vitamin A and that it was necessary to produce more carrots. It we give a guarantee to farmers, the administrative work must be carried on by some division in my Department. We cannot close down a division and leave farmers high and dry. We must decide first what our policy is to be as far as these guarantees are concerned. I merely wanted to assure the hon. Gentleman tonight that we are considering these things.
I hope I have explained to the House that the action we took—although, perhaps, a little difficult to understand as I have explained it—was, after all in the interests of the whole nation.

Mr. D. Marshall: Is there any hope that the hon. Lady will give me any reply to the points I addressed to her?

Dr. Summerskill: We are doing what we can. The hon. Gentleman knows we have undertaken that if potatoes deteriorate we are prepared to remove them. But those about which he is talking are in fairly good condition. That is why we have not been able to move them as much as we should have liked to have done.

Mr. Osborne: May I ask the hon. Lady a further question? Has she nothing to say about the acute onion position? This matter affects many farmers in my constituency. Can she hold out any hope for them about what action will he taken?

Dr. Summerskill: The hon. Gentleman. I know, has been away on important business, but this question has been raised in the House time after time and my right hon. Friend has explained the position. It just happens that we did make a contract to import onions. We asked the exporters to delay sending them here until about the end of December hut it was quite impossible, of course, to cancel the whole contract. Again, Nature intervened and the yield of onions was bigger. I think, than many people had seen in their lifetime. That is why many farmers. I am afraid, have been left with onions on their hands.

Orders of the Day — INCOMES, COSTS AND PRICES

8.17 p.m.

Mr. Ellis Smith: At about this stage of the Parliamentary programme all Chancellors of the Exchequer answer questions of the character I am about to tonight, by stating that they cannot anticipate their Budget statements. That is understandable. But the people in the country are now anticipating it and are considering what action should be taken. It is for that reason and because of the policies now being followed that I have put down a series of questions to show the concern which this question is causing us.
My first question yesterday was to ask the Economic Secretary to the Treasury
if he will give in tabular form as much information as possible to enable a measurement to be made of the percentage of the national income distributed in the form of wages, salaries and profits, respectively, in the years 1939, 1946 and on the latest possible date.
In the reply I was referred to the Annual Abstract of Statistics, table 253.
My next question was to ask the Economic Secretary:
if he will give in tabular form the total profits made by companies showing returns, the amounts put to reserve and the amounts paid in debenture; and the total wages paid for the years 1938, 1945, 1947 and 1948, respectively."—[OFFICIAL REPORT, 7th February, 1949; Vol. 461, c. 18.]
The answers given to those questions were very disappointing. I do not think they uphold the Treasury standards.
Two other questions of mine, which appeared on the Order Paper today, but were not called, were as follows:
To ask Mr. Chancellor of the Exchequer if he is satisfied with the response made to his appeal for restraint in profits, wages, salaries, price reduction and control; what steps he intends to take to reduce prices; and when does he expect that his policy of restraint will satisfy the economic needs of the country.
The answer was as follows:
As my right hon. and learned Friend the Chancellor has said on a number of occasions, I regard the response to the policy set out in the White Paper on Personal Incomes, Costs and Prices as satisfactory. The Departments who administer price controls will continue to make such reductions as are practicable in the light of costs and margins. …
The answer to a further question was:
… I would refer my hon. Friend to the Annual Abstract of Statistics. …

I find on examination of the Index of Retail Prices, an official publication, that taking food and all other items in June, 1946, as an index figure of 100, on 14th September last year the figure had risen in the case of food alone to 107 and in all other items to 108. I suggest that while it is correct that the wages of work people have risen, the value of wages is determined by what they can buy and it is real wages which count. One of the most patriotic acts of any section of the community since the policy of restraint was adopted, was taken by the Co-operative movement. To its everlasting credit the Co-operative Society met immediately and considered the Chancellor's statement. They called a special conference and used their newspapers and the whole of their propaganda instruments for the purpose of appealing to the whole movement to play their part in this policy of restraint. Unfortunately, that example has not been followed by others. The same applied in the main to the trade union movement.
While it is true that wages have increased, the most serious increase has been in direct and indirect taxation. The workers of the country feel direct taxation most, because in comparison they suffer under the division of the national income. When the Budget is presented, it will be too late to raise this matter, because the Chancellor will have made his statement and, in the main, that will become accepted policy. Now is the time for hon. Members in this democratic institution to place their views on record and, above all, to reflect the ideas of the people they represent, in order that between now and the introduction of the Budget, the Chancellor and the Financial Secretary to the Treasury can give consideration to what is said in Debates of this kind.
The biggest proportion of workers' wages is spent on food and it is on food that indirect taxation has a very serious effect. In the White Paper on National Income and Expenditure of the United Kingdom, 1947, Command Paper 7371, we find that the division of the national income is set out very clearly. I think the authorities are to be congratulated on the way in which it is set out. I wish it could be carried further, so that the people could measure more accurately and scientifically the allocations and divisions of the national income.
The people for whom I am speaking are making the greatest contribution towards our economic recovery and the Budget instrument and legislation should be used for the purpose of improving their standard of living as soon as possible. As soon as the economic position of the country makes it possible for us to afford it, we should increase the purchasing power of the people. We find on page 7 of the White Paper that the composition of the national wages bill for 1946 is set out against that of 1947. In 1946 the total wages paid were £3,095 million against £3,530 million in 1947. The total wages paid in 1938 amounted to £1,735 million and in 1947 to £3,530 million. That should be contrasted with profits in 1938 of £1,570 million and in 1947 of £3,242 million. On page 10 we find that the proportion of personal income required to meet taxation in 1938 was £4,884 million and in 1947 £9,153 million.
On page 12 we begin to see the very serious effects of national taxation on various grades in the community. We find that on current market prices on durable household goods we spent in 1946, 129 per cent. against 168 per cent. in 1947. In clothing in 1946 the figure was 137 per cent. and in 1947 158 per cent. There we see the serious effect on people with limited incomes. I am not complaining because it was necessary to make our immense contribution to winning the war, but I am concerned about the effect upon the people of this country. The time has arrived when the matter should be reconsidered in the light of the record of the people and the present situation.

Mr. Deputy-Speaker (Mr. Bowles): The hon. Member should be careful. He is not entitled to refer to legislation, as he knows, nor is he in Order in suggesting proposals for inclusion in the Budget which is not yet legislation.

Mr. Smith: I thank you, Mr. Deputy-Speaker. I recognise that and I shall be careful to keep to what you suggest.
I find that between 1924 and 1935 the workers of this country were responsible for an enormous increase in output, but that did not reflect itself in increased earnings. I remember that when the Economic Secretary to the Treasury was the financial editor of the "Daily Herald," he won great admiration

throughout the country for the most in formative statements which appeared in the financial columns of the "Daily Herald" at that time. They were always written from the point of view of the people for whom the paper was catering. He set out at that time what I am saying now. If any hon. Member wishes to look it up, they will find it in the "Daily Herald" of 19th September, 1939.
In the Statistical Memorandum provided by the Library staff we find this statement setting out wage increases since the Statement on Personal Incomes, Costs and Prices. Let me make it clear that I am not speaking critically of the preparation of this material because a great deal of credit is due to the people who prepared it. Someone must have been putting in a great deal of hard work. But there is some misunderstanding in Page 4, about the obligations of those engaged in the engineering industry. It is well known that those in the engineering industry were far behind the rest of the community in receiving increases in their wages. Because of that, they were not able for some time to accept this policy of restraint. There were mountains of misrepresentation by people who ought to have known better, against the engineers because of the policy they pursued. Even in so far as their present wages are concerned, measured by their output and contribution towards economic recovery they are nowhere near as high as they should be. I hope that that will be taken notice of.
Command Paper 7371 states that in 1938 the national income was £4,707 million. In 1947 it was £8,770 million. I said that the people are rightly looking forward to the Budget instrument being used for the purpose of making adjustments in the allocation of the national income to the various people engaged in industry and life generally. It is the manual workers in this country, in the main, who are making the greatest contribution to economic recovery. They are working faster and harder—and there is a difference between them as everyone in industry knows—as a result of scientific motion study, micro-motion study and new ideas of piece work. All this is having its effect upon the tempo and speed of industry. They do not mind it, but they are expecting that the Budget instrument will be used for the purpose


of making adjustments in the way they are entitled to expect. I hope that the Economic Secretary will report this to the Chancellor and that they will consider an adjustment between the various grades of the people. Consideration should be given to the continuance of the Purchase Tax on household needs and the urgent needs of the people.
There should also be a more scientific policy adopted with regard to price control and here is the principal point I wish to raise. In the policy of restraint, not only were wages to be affected, but profits. We do not lose sight of what can be done with debentures and how modern accountants can deal with such matters. We do not wish to say too much about that, except that it needs to be mentioned. It was also said in this policy of restraint that steps would be taken to control prices and to reduce prices. Prices have not been reduced. I am not asking for legislation but for an examination between now and when the Budget is introduced, so that an announcement can be made simultaneously with the introduction of the Budget that it is the intention of the Chancellor to introduce a more scientific policy of price control. In addition to that, there should be price reductions. If there is to be restraint in the various allocations of the national income, there should be restraint and reduction in prices. It is that which is causing great concern in the country.
I think therefore that time is being well spent if hon. Members this evening put on record their views on this matter, in order that between now and next April the Chancellor, the Economic Secretary, the Treasury staff, and also other right hon. Friends can give consideration to this problem.

8.46 p.m.

Mr. Spearman: When the hon. Member for Stoke (Mr. Ellis Smith) draws attention to the fact that it is the common man in the street, the ordinary person with the low income, who is suffering very much from the way the economy of this country has been handled during the last three years, I quite sympathise with him. I think it was the week before last that the Chancellor of the Exchequer gave us figures showing that the purchasing

power of the £ had fallen, since this Government came into office, from £1 to 17s. 6d. in spite of the immense amount of help, the extraordinary help, we have received from the United States—as I said the other day it is equivalent to £1 a week for every family in the country for every week in the year—and also in spite of enormous subsidies which have been paid out.
When, however, the hon. Gentleman suggests that by some juggling of redistribution of the national income, the matter can be cured, I would draw his attention to what was said by one of the members of his own Front Bench, the Secretary of State for Scotland, a short time ago. He said at Edinburgh:
If every penny was taken from the people with over £2,000 a year it would not increase the workers' income by a shilling per day. Whatever redistribution is necessary is a simple budget operation, but our social problems will not be solved by chasing the will-o'-the-wisp of mere distribution of incomes.

Mr. Ellis Smith: May I explain to the hon. Member that I was not using the word "juggling" in a bad sense but in the sense—

Mr. Spearman: Only adjustment?

Mr. Ellis Smith: Yes, and secondly, we stand for increase in production whereby the national income will be increased. All that I am pleading for is that the people for whom I speak shall receive consideration.

Mr. Spearman: I entirely agree with the hon. Member if he means increasing the national income in actual production and not in pounds, shillings and pence. That is another matter. I thought he was thinking that the national income should be redistributed.
I also would quote from the White Paper from which the hon. Member quoted. If we take all the incomes in the country under £500 a year, according to page 9 of the White Paper they amount to over £5,000 million, whereas all the incomes over £2,000 a year taken together amount to only £300 million. If we look at it from another point of view, that of the proportion taken by wages and profit—and I have now the figures of two or three years back—wages took 41 per cent. of the national income and the distribution on ordinary shares took 5 per cent. of the national income, of which more than half went in taxation.
I am not saying that those are unfair proportions nor am I quarrelling with them. I am merely saying that that distribution, being what it is, there is no way of altering the present distribution of the national income which would enable any materially greater burden to be borne by the better-to-do over the poor.

Mr. Scollan: Is the hon. Gentleman not aware that last year the owners of industry took out almost as much in profits as the workers took out in wages?

Mr. Spearman: No, I am certainly not aware of that. If the hon. Gentleman looks up the facts, I think he will find that that is completely untrue. I am trying to make the point that there is no way of altering the present distribution in order to relieve a burden on any particular section. I think that the hon. Gentleman exaggerated a little the hardships inflicted by this Government. I do not want to be in the position of defending them. I think that we would be much better off without them, but the hardship is not perhaps quite so great as he suggested. If we take the amount spent on tobacco and alcohol, we find that that is nearly three times as large as the total amount spent on rates, rents and water. It is obviously not just a few people who are eating and drinking. No stomach could stand all that. Obviously it is the bulk of the people who are spending the money in these ways. There is not quite the hardship that the hon. Member indicated, though I do not wish to belittle the sins of this Government in any way.
We all agree that the only way in which we can keep down prices is by producing more. The hon. Member suggested that we should increase incomes. We should increase, not the pounds, shillings and pence—that can be done by the printing press—but what can actually be purchased. I do not believe that we can do that unless we have a healthy economy. It can be done in a totalitarian State by concentration camps, machine guns and things like that; but in a free economy it can only be done if the Government get a fair balance between demand and supply. That is a point which I know is accepted by the present Chancellor of the Exchequer, and which, most unfortunately, was not accepted by his predecessor.

Mr. Fairhurst: Would the hon. Member explain how he reconciles the point he had just made with the period when the shops were full of commodities and prices dropped steadily month by month until they reached a very low ebb, yet even then people could not afford to purchase them?

Mr. Spearman: I am a little confused by the hon. Member's question. Surely, he does not deny that there has been a greater demand than there has been supply of goods. That has what has been driving up the prices. I thought that the whole point of the hon. Member for Stoke in raising this matter was that prices had been rising and living was costing more. The two hon. Members must fight that out between themselves. I do not want to intervene there.
I am trying to say that the only way in which we can get efficiency is by getting a balance between demand and supply, Then we will get drawn into those industries where they are most required the necessary men and materials. Today we have got them where they are not required. The Government admitted that in their White Paper a year ago. They made plans how they would draw men into vital industries and out of Government service, certain building activities and the distributive trades. In that they have completely failed. They have not reached a portion of their target. I have the figures if anyone wants them.
Therefore, first, we must get people in the right jobs. Second, we must be efficient. I always stress that it is not only a matter of the men being in the wrong place, it is not only men not working hoard enough, but it is also a question of employers not being sufficiently enterprising and efficient. I am sure that there are all sorts of examples of that. There are bound to be so long as employers are protected by a Government who do no allow free competition. So long as we have a position where efficient people cannot start up in competition or where people's quotas are based entirely on what they did in 1939—and therefore the old people are protected against newcomers—we shall not get enterprise and competition. That is one of the troubles today.
The third and perhaps the most important point of all is our failure to re-


equip industry. I know that the Economic Secretary to the Treasury will tell us that that will turn out all right. I can only say that up to date we have not spent anything like what we ought to spend on re-equipping capital industry in this country. We are spending £2,000 million but I think we will find that a large proportion of that is going in repairs and not in new equipment, and in financing the much higher cost of stocks which must be carried now. Mr. Chambers, in a most interesting article in a recent issue of the "Lloyds Bank Review," stated that he thought that the actual capital equipment of the country was diminishing in volume instead of increasing. Mr. Chambers is a former official of the Treasury.
It is clear that we cannot increase the equipment of the country unless we produce more—and that is a vicious circle—or the consumers spend less—and that is what the hon. Member is fighting—or the Government spend less. Therefore, it seems to me that what the hon. Member for Stoke is really saying, though I am sure he will not accept this interpretation, is that we cannot get more than a quart out of a quart bottle. The only solution is to make more, and we cannot make more without being more efficient and having better equipment. That means apparently that either consumers must spend less or the Government must spend less. I suggest that the hon. Member should read his speech and think over the matter from that point of view. He may possibly come to the sad conclusion that we cannot get the economy of the country right unless there is a drastic reduction in Government expenditure. I do not believe that there is any other solution.
The hon. Member suggested that there should be cuts in Purchase Tax. I am all for reduction in taxation if there is a greater supply of goods, but obviously we bring about a disequililbrium at once, if we reduce taxation without increasing supplies. Apparently under present conditions we cannot increase our supplies at the moment. Therefore, until we can do so, we must see that the third party—the Government—spends less. For the time being the Government must spend less. They

must do without all sorts of things on which we would like to see them spending money. They must not merely avoid waste but they must not, for a time, do even desirable things, so that we can get the economy of the country right in order to produce the maximum.

8.48 p.m.

Mr. Tiffany: We are all obliged to the hon. Member for Stoke (Mr. Ellis Smith) for raising this subject, which is of vital interest. In any little criticism we might make of the Government in this matter, we on this side of the House recognise that the problem facing them after the last war was far greater than that which faced the Government after the first world war, and they have tackled it in a far better manner. Even on the question of food prices one recognises that prices after the last war did not reach the heights that they reached after the first world war. The Government played a good part in that respect.
The hon. Member for Stoke made reference to the Co-operative movement and the response which it made to the plea by the Chancellor of the Exchequer for reduced prices in order to reduce the cost of living. The movement reduced their prices of rationed commodities generally and the cost to them varied between £28 million and £30 million. This had tremendous repercussions upon the Co-operative movement. Instead of co-operation between the Treasury and the Ministry of Food in order to endorse this action and to drive it still further home, so that it would have a greater impact upon private traders throughout the country, we found that there was a lack of co-operation between the two Departments. The impact of the cut-price policy had its effect upon the Co-operative movement, and one saw that the dividends of Co-operative societies dropped by 1d. to 7d. in the £, and interest rates were being reduced simply because, at the same time as the price cuts were inaugurated, there were demands for increased wages.
I am not complaining about that; I am merely saying that the demand for increased wages came along at the same time as the price cuts. There were also extra charges to meet in relation to the new social insurance. Again, I am not complaining, but pointing out that the sum total of these things made its impact


upon the Co-operative movement. There is not the slightest doubt that, if there had been more co-operation between the Treasury and the Ministry of Food, and other Departments with which the Co-operative movement is in contact, there certainly would have been a better position than exists at present.
Let us look at one of the staple commodities—bread. Under its price reduction policy, the Co-operative movement reduced the price of its bread by a halfpenny per loaf. The result of that was that, where the private trader did not reduce the price of his bread, there was an increase in the sales of bread by the Co-operative societies. It was natural, and it was just what the Chancellor wanted. He wanted the trade to go where the price was lower, in order to bring about a further reduction in prices. But what happened as a result? We found that the Co-operative movement was placed up against a brick wall, because, when bread rationing was taken off, flour rationing was imposed upon the bakers, and the datum line of flour supplies was fixed as June, 1938. Above that datum line, additional flour would not be supplied to bakers unless it was to meet the needs of an increased community due to re-housing.
The Ministry of Food could not depart from this policy, simply because the Ministry did not possess the necessary dollars with which to buy the additional wheat and flour, but still the tendency of the people was to consume more bread. The increase over pre-war has been approximately 17 per cent. So we had this ridiculous position arising, due to the lack of co-operation between the Ministry of Food and the Treasury that, where this cut-price policy was operating as the Chancellor wanted, they found themselves up against a brick wall of the cut-price policy, the increased demand and the restriction on flour supplies. That was obviously a peculiar situation, but one that could have been eased if the Treasury had been prepared to look at it with the Ministry of Food and to suggest that the supplies should go into the cheaper market.
We had a similar position operating in relation to subsidies. When the subsidies were taken off footwear and clothing, I remember putting our point of view about it. In the Co-operative movement we

have expressed ourselves time after time. When these subsidies were taken off they were running at £11 or £12 million a year, but coincidental with the removal of the subsidies came demands for increased wages by the boot operatives. The result was that when the subsidies were removed from boots and shoes, the prices increased from 10s. to 15s. per pair.

Mr. Scollan: Even £1 in some cases.

Mr. Tiffany: As my hon. Friend suggests, up to £1 in some cases, although the general average was from 10s. to 15s. per pair. One would have expected that, if the Chancellor was seeking to secure a reduction in retail prices, he would have seen at least that some of these subsidies were reimposed on these commodities in order to reduce the prices of footwear. Although it might not have been possible to cover the whole 10s. or 15s., nevertheless the return of the subsidies would have reduced the prices of footwear to something like what they were before the subsidies were taken off. I believe that the Chancellor will have to look at the subsidies again and perhaps restore them as the best way of reducing prices and reducing the cost of living to the people of this country.

Mr. Spearman: If the hon. Gentleman hopes to reduce prices without increasing the supply, will he not simply find that the increased purchasing power thus released will drive up the demand for goods?

Mr. Tiffany: I am not prepared to accept the argument that the danger of inflation lies in the hands of the people for whom we are speaking. The reverse has been the situation. The danger of inflation was not in the direction of the ordinary working-class people. What have we found in the case of the Co-operative societies? We have found that during the last 12 months share capital has been withdrawn from the societies, whereas previously, during the war and after, when we had a danger of inflation, capital was being handed back to the movement. Now the position is altered, and capital is being withdrawn, a clear indication that there is a shortage of purchasing power in the pockets of the people at the present time; otherwise, there would not have been these withdrawals of capital.
In relation to the Purchase Tax, we have had no hesitation in stating our point of view, and we have pressed the Chancellor to see if methods could not be agreed upon whereby the removal of the Purchase Tax would not operate with any great detriment to the retailers who are holding their stocks. We are convinced that, if the Treasury will get down to it, a method can be found whereby the retailer will not have this heavy burden to carry when the tax comes off. We are hoping that the Chancellor will assist the reduction of the cost-of-living figure by doing something in this direction, and if he does so, he will have the enthusiastic support of this side of the House.

8.59 p.m.

Mr. Norman Bower: There are some brief comments which I should like to make on the interesting speech of the hon. Member for Stoke (Mr. Ellis Smith). In the first place, I personally deprecate the view which he expressed, although I know he holds it quite sincerely, that the people whom he represents, whoever they may be—and I gather that he was referring to manual workers—are making the biggest contribution to our economic recovery. They are certainly making a very big contribution, and nobody would deny that for a moment, but, in my view, with very few exceptions, people of all classes are making an equal contribution to our economic recovery, and I think that an incentive is required for everybody at the present time. If we are to achieve the fullest production of which we are capable as a nation, there is just as much need for additional incentive to the £10,000-a-year executive as there is for additional incentive to the £6-per-week workman. I would differ from the hon. Gentleman, therefore, on that point.

Mr. Scollan: Did the hon. Gentleman ever hear of a £10,000-a-year executive director dying, and of production stopping because he was dead?

Mr. Bower: I have certainly heard of many cases and known of many cases where production has suffered very severely as a result of the death or retirement of £10,000-a-year executives and other executives, and I have known of cases where businesses have been dis-

rupted, have gone downhill and completely disappeared as a result of the disappearance of people of that type. That, however, is irrelevant to the argument. If we are to achieve the fullest production of which we are capable it is necessary to give incentives to everybody who is contributing to production, and I maintain that people in this position, provided they are working hard and are efficient, as most of them are, are as much in need of additional incentives at the present time as people lower down the scale.
The hon. Member for Stoke referred to the distribution of the national income. I would point out to him that at any rate that distribution is still steadily becoming more favourable, on the whole, to labour as opposed to capital. We have been given figures for last year and have been told that 93 per cent. of the capital invested in public companies has subjected itself to the voluntary dividend limitation. There has been no increase in dividends during the whole of last year in respect of 93 per cent. of capital. We are also told from the report of the Ministry of Labour for last year, published in the Press only this morning, that 7½ million wage earners have received wage increases during the last year. I am not complaining about that or saying that it was necessarily wrong; nor am I saying that most of the wage increases were not justified for one reason or another. I think some were justified and some probably were not. At the same time, if one looks at the situation fairly, one must appreciate that the balance is still being steadily if slowly shifted in favour of labour as opposed to capital.

Mr. Scollan: The hon. Member gave some figures. The figures given about wage increases since the Statement on Personal Incomes and Costs is 6,783,500 personnel who received £1,619,300.

Mr. Bower: I said 7½ million and I gather that the figure was nearly 7 million. If I made a slight mistake I apologise, but I do not think it invalidates my argument.
In an interruption when the hon. Member for Scarborough and Whitby (Mr. Spearman) was speaking, the hon. Member for West Renfrew (Mr. Scollan) said that last year the owners of industry, by which I presume he meant the share-


holders, took nearly as much out of it as the wage earners. It so happens that I have here, just by chance, two specimen figures which I think shed a certain amount of light on the hon. Member's statement. These figures refer to two of the largest companies in the steel industry in which, I think, we are all interested at the present time. One of those companies is Colvilles, a very big company. Last year, after their last financial year, out of every £ of income which they received, wages and salaries accounted for 5s. and dividends for 2d. In the case of another large company, the United Steel Company, whereas they paid out £12 million in wages the amount paid out in dividends was only £553,000, or in other words 1.4 per cent. of their total income.

Mr. Fernyhough: What the hon. Member does not seem to appreciate is that it is a question of the number of people among whom the respective sums are divided. If we divide £12 million amongst, say, half a million people, it is not quite so good as dividing £500,000 between 5,000 people.

Mr. Bower: I am not saying that every individual wage earner necessarily received the same amount or more than every individual shareholder. That is a thing which it is quite impossible to say. I do not know whether it has ever been analysed; I should imagine not. Certainly I would not say that it invalidates my argument. The hon. Member for West Renfrew was referring to the total distributed amongst the shareholders, on the one hand, and the wage earners on the other hand. In my submission the figures I have given, which I think I am safe in saying are fairly typical throughout industry as a whole—and I do not think the Economic Secretary to the Treasury will dispute that—show that what the hon. Member said in his interruption was completely wide of the mark. I submit that these figures also show that there is comparatively little scope for an actual redistribution of the national income at the present time. As my hon. Friend the Member for Scarborough and Whitby said, any improvement which is to be hoped for must be obtained through a general all-round increase in production.
Finally, the hon. Member for Stoke referred quite rightly to the contribution

made by taxation, including Purchase Tax, to keeping up prices and the cost of living. That, of course, is perfectly true, but at the same time he must surely realise that the social services we have today and all the other desirable forms of expenditure, which I am sure he supports, have to be paid for, and because there are so few wealthy people left and because there is so little scope for redistribution of the national income, these things have to be paid for by the people as a whole. I think that is becoming more and more appreciated in all parts of the House and throughout the country. I, therefore, submit to the hon. Member that the best thing for him to do, if he wants to achieve the wholly laudable and desirable projects which he mentioned in his speech, is to encourage the Government which he supports to economise in every possible direction and to cut out all extravagance. That, I suggest, is the best way to reduce prices, to keep the cost of living down and to improve the position of the people as a whole.

9.7 p.m.

Mr. Parkin: I intervene only to reply to a point made by the hon. Member for Scarborough and Whitby (Mr. Spearman) and mentioned again by the hon. Member for West Harrow (Mr. Bower). I think neither of the hon. Members has done any great service to the cause they have at heart, the cause of increasing production in this country, by adopting the line which they have adopted.
My hon. Friend the Member for Stoke (Mr. Ellis Smith) referred emphatically to his basic desire to get an increase in production first of all. There is all the difference between an hon. Member on this side going to the workers and saying, "Look, boys, there is only so much to be divided from profits and if you take it all and divide it amongst yourselves at the present time it will come only to a penny or 2d. an hour or a bob or two a week; therefore, the main problem is one of increasing production." There is all the difference in the world between a trade union leader saying that to the workers and an hon. Member on the other side getting up and saying, "You have taxed us so much and there is very little more for us to contribute; you get


very little if you divide all the moneys and, therefore, we are not called upon to do anything more and the only thing is either for the worker to work harder or the Government to spend less." Hon. Members opposite shake their heads, but that has been the approach of those speeches. I do not think they were meant in any hostile manner.

Mr. William Shepherd: What is the difference? I should have thought that if you say something which is a statement of fact, it does not really matter very much whether it is said by someone on that side of the House, by someone on this side of the House, or in Aberdeen. It remains a statement of fact.

Mr. Parkin: In one case it is an appeal for greater production, whereas in the other case it appears to be "We cannot do anything more; it is up to you."

Mr. Spearman: That was far from my meaning or that of my hon. Friend, I am sure. All that we thought it right to do was to try in a humble way to expose the fallacy that the matter could be put right by any juggling. It can be put right only by producing more. There are certainly not only workers but managers, too, who can contribute more.

Mr. Parkin: I do not disagree with the hon. Member at all, and I am anxious that we should reach full agreement on the point. Let me complete the case I was trying to make, which was to show the bad effect on productive workers of speeches of the sort which hon. Members opposite have made tonight. There is far too much apathy in industry at present because directors and managements appear to be satisfied with the profits that are maintained at something like the rate at which they have been maintained during the last few years, with a fair amount going to reserve, with the Chancellor taking a fair amount, with the directors having a car each, with the directors' canteens very well run, and with the profit on turnover only a few pence in the £.
The effect of that attitude—that satisfaction of directors and managers—is that the workers are not encouraged to make their suggestions for improvements

in productive efficiency. The bad moral effect of this complacency on the part of the managements about the amount of profit that may or may not be available for distribution is the discouragement of the workers from making their practical suggestions, through joint production committees and trade unions, and so on, for economies, for greater efficiency, which are necessary to procure that greater standard of living we all so ardently desire.
It is not a matter of a few pence to be distributed from existing profits among the workers, but a matter of economies of thousands of pounds per day in some factories which could be achieved if only managements would contrive to tap that vast reserve of good will, experience and knowledge amongst the workers in the factories. If only we could do away with the sort of argument which says. "I am taking only a halfpenny from each of you, and it is not immoral to do that," and the attitude of mind which asks whose turn it is next to put something into the "kitty," and if we could get down to the fundamental problem raised by my hon. Friend the Member for Stoke, that is, of increasing production and giving real incentive to production, we should do something practical. So long as the argument consists of saying, "It is the other fellow's turn to do something about it," we shall preserve this animosity, this dull suspicion of the intentions of managements, and we shall not obtain from the workers the help they will give us if we invite them to give it.

9.13 p.m.

Mr. Scollan: I want to thank my hon. Friend the Member for Stoke (Mr. Ellis Smith) for raising this matter, in spite of the fact that it has had a very hectic and stormy reception. My hon. Friend asked the Chancellor of the Exchequer in the next Budget to do something to redistribute the burdens placed upon the people of this country, to lighten the heavy burden the ordinary manual worker suffers; and he spoke particularly of the injustices to the engineers. Many hon. Members on the other side have taken the opportunity to try to prove—to their own satisfaction, no doubt—that the burden is equally onerous upon the owners of industry, the investors in industry, the executives in


industry, and on the ordinary workers in industry.
There is one point I would ask the Economic Secretary to deal with when he replies. The fiduciary issue in 1947 was £1,450 million; that is the money in circulation in this country with which to purchase goods. The large bulk of that was paid out in weekly, fortnightly and monthly salaries to the workers. It always is. In 1948, in October and November, it was £1,300 million, a reduction of £150 million. I want to ask the Economic Secretary to tell us from which section of society that £150 million was taken. That is what the Chancellor of the Exchequer called disinflation as drawing a distinction between deflation and inflation. There disappeared out of circulation £150 million between 1947 and 1948. Where has it gone? I suggest that it was largely taken out of circulation owing to the increased productivity of industry. I hope that the House will forgive me for being so presumptuous as to say a word of explanation on what comes out of industry and what does not.
When I said that as much came out of industry in profit as came out in wages, I was dealing with the total production of the country, and the total overheads that come out of it. When hon. Members opposite were dealing with the matter they were dealing with productive earnings only. It had not penetrated their skulls that there is not an insurance company in the country that declares a profit, not a bank that declares a profit and not a distributive agency that declares a profit without that profit originally coming out of the productive processes of this country. The original source of the profit declared by every concern in this country is the productiveness of the nation. What is the most productive machinery of the nation? The most productive machinery is the farmer in agriculture, the miner in the coalmines, the cotton worker in the cotton mills, and the engineer and shipbuilder. These are the main industries of this country, and as soon as we put Purchase Tax on the things that the workers in, those industries need in order to live an ordinary decent life—on dungarees and on a pair of boots—we are reducing their wages. That is where the £150 million has gone.
The hon. Member for Scarborough and Whitby (Mr. Spearman) made a point of the amount that was spent in alcoholic liquor, in tobacco and, he might have added, in greyhound racing, and so on. This money is not spent, it only changes ownership. What he ought to have done was to take the total consumption of tobacco before the war and the total consumption of tobacco now and add to that the increase in the population of 5 million people. What do we get? We get the fact that of 50 million people in this country, 20 million are working class, and the 20 million are rationed and doing with less than they could have got in 1938.

Mr. W. Shepherd: Surely the hon. Gentleman is not trying to tell the House that the average consumption of tobacco per person is now less than it was in 1938 because, if he is, he is entirely misleading the House. It is true to say that the average consumption of tobacco today is somewhere between one-third and one-half as much again as in 1938.

Mr. Scollan: Since 1938 we have an added number of people who have become addicts to smoking. In 1938, there were half the number of females smoking that there were in 1940. The rationing of the 20 million working people today is so arranged that the money they have barely covers their needs. It varies from trade to trade, but taking an average, with the purchases they have to make and the taxes and other things they have to pay, they are not one whit better off.
The main point I ask the Economic Secretary to consider is this. The productivity per worker in Great Britain in 1948 is at least 25 per cent. greater than in 1938. I am not asking him to cheer that; nobody would do that, because the country has just emerged from the second world war almost on the verge of bankruptcy. But because of these figures we are entitled to ask, as my hon. Friend asked, that when the Chancellor introduces his Budget he should give some kind of relief to the ordinary worker and place the burden where it can be carried.
I turn now to the distribution of profits. Surely hon. Members read in the Press quite recently how at the shareholders' meeting of one company the chairman deliberately defied the White Paper and said they would pay more in dividends.


I noticed that one or two economists hailed that as a challenge to the Chancellor's powers, and I am watching and wondering what the Chancellor will do, I know what he ought to do.

Mr. Spearman: That case is a great exception. Indeed, I think the Chancellor said the other day that on 93 per cent. of capital, there had been no increase on dividends, but that for a small proportion there was good reason for the increase that had taken place.

Mr. Scollan: Yes, that is quite possible. I am not accepting it, although the Chancellor has said it, for the simple reason that many companies which are making a profit now, never made a profit before 1939, not because the workers did not work hard enough, and not because the directors were not diligent in their duties, but because of the stupidity of putting capital into an industry that was already overcrowded in the market at that time. That is one of the wastes that we have had under the capitalist system, and the worker always pays for it.
I ask my hon. Friend when replying to bear in mind the main point, that between 1947 and 1948, £150 million has disappeared from the fiduciary issue—the money in circulation.

Mr. Spearman: Surely the hon. Member realises that to measure that, he has to measure the velocity. A small amount of money circulating very quickly will do the work of a large amount of money circulating very slowly, so that that figure is meaningless by itself.

Mr. Scollan: I cannot accept that, because this is the ordinary medium of the circulation of commodities. At the week-end the workers draw their wages; they give them to their wives—sometimes; the wives then pay the rent and purchase what they require from the grocer, the butcher and the baker; and then the grocer, the butcher, the baker and the factor take the money back to the bank. That happens weekly, fortnightly and monthly. That is the medium of circulation which keeps things going; that is the ordinary circulation that must operate if the people are to, be fed, clothed and housed. To treat it as hon. Members opposite are doing is to deny that that is how it operates. That is in fact how it does operate.

Mr. W. Shepherd: No.

Mr. Scollan: Certainly it does. And because it operates in that way, if £150 million is taken out of circulation and put into the till, some section of society must have lost it. Nobody can tell me that that was the investing class, because in their case the money is dealt with only once a year: it is not in circulation.

Mr. Shepherd: Surely the hon. Gentleman is not trying to tell the House again that velocity plays no part at all. Obviously velocity must be a factor that has to be calculated. It is also a fact that a great deal of money was rushed back to the bank some little time ago, when certain Questions were asked in this House which gave the impression that the Chancellor might be cancelling the existing notes.

Mr. Scollan: The hon. Member may remember that on three or four different occasions I put down a Question to the Chancellor and to the previous Chancellor asking him to change the note issue back to the old Treasury note. When that Question was put down, there was a rush of loose change back to the bank by the people who thought it might operate. That does not alter the issue at all. That loose change has been taken in, unless hon. Members are trying to make us believe that £150 million in the black market was brought in. If it were in the black market it could not be in circulation and counted as such. Hon. Members opposite cannot have it both ways.
On this issue there is one point I want to raise with the Economic Secretary. I hope he will impress upon the Chancellor that we on this side of the House are not at all satisfied now that all the sacrifices have been made and asked for from the workers of this country. I make no apology for saying "the workers of this country." They have made tremendous sacrifices for the Chancellor, the Prime Minister and the Foreign Secretary. The Foreign Secretary told us in this House that if he had ten divisions he could barter and argue better at the United Nations organisation. What was the result? It was conscription of the workers, who were taken out of the industry, and other workers had to carry the burden. They are still carrying that burden. There is a limit to that burden, and I would ask


the Parliamentary Secretary to impress on the Chancellor of the Exchequer that it is time the workers got something better than they got during the last 12 months.

9.29 p.m.

Mr. Fairhurst: Hon. Members present are indebted to my hon. Friend the Member for Stoke (Mr. Ellis Smith) for bringing forward this interesting subject, and I should say that the import of it all was to impress in an indirect way on the Chancellor of the Exchequer what are our wishes. Now that he is building up the national housekeeping burget, he should have certain objects in mind, and the primary one, as I see it, is that he should lighten the burden of taxation on those least able to bear it. How can that be done today? All the arguments on the different aspects of the economic situation which have been tossed backwards and forwards tonight bear some relation to the facts of the case, but the whole thing seems to resolve itself into a system of society that has grown up in this country over many years, and has resulted in a chaotic system developing, but has, at the same time, enabled us for generations to import from other countries what the workers here could not produce.
That state of affairs is reflected in the investments which we had in other countries, and on which we largely drew in the 1914–18 war and again in the 1939–45 war. They enabled us to bring into this country cheap commodities, made by cheap labour in other countries than this. As a result of two wars within 25 years, we have practically exhausted all those foreign investments, and in 1945 we found ourselves a debtor nation with a National Debt of about £24,000 million and having to pay our way. In future our social standards will be determined by our productivity. If we can increase our productivity by 10 per cent., our standard of living will improve by 10 per cent. What we received in the past from our overseas investments has now gone, and our standard of living will be the result of the contributions of the engineers, the farmers, the textile workers, the miners, and all those who make up the social value of a commodity. In his way the Chancellor is probably trying to equate the uneven balances we had in the past, but we are not satisfied that he is doing it. We still

feel that the investing classes are taking a higher margin out of the national income than they ought to do. We may be wrong, but no evidence has been produced to show that we are wrong.
We are also satisfied that the lower income groups are finding it very difficult to live. It has been suggested that they are spending far more money on alcoholic liquor, tobacco, horse-racing and dog-racing, but that does not seem to be correct. The major portion of a man's wage is spent on his family and any left over is spent on tobacco, beer or some other special luxury. However, all the evidence today is that less money is being spent on beer, horse-racing, dog-racing and the pictures. It is a gradually diminishing quantity, showing that something has happened in relation to individual incomes which is resulting in less being spent on other than absolute necessities. I have asked for the observations on this matter of scores of people in our industrial towns and the general opinion is that they do not find it easy to live a normal life on the wages they are getting now.
It should be borne in mind that this is at a time when employment is better than it has ever been, an age of full employment. If people cannot maintain their standards today, what will be the position if unemployment comes? That problem is exercising the minds of many people in our industrial areas. Fear of unemployment and memories of a bad past have not yet been eliminated. When we say that people should increase their productivity, should apply themselves to new methods of production, and should be prepared to readjust their outlook in the workshop, they cannot be persuaded that the bad past has gone for ever. It is difficult to convince them that they should reconcile themselves to increased productivity knowing that, as a result, a time may come again when unemployment or semi-unemployment will he knocking at the door. At a time when this country had the world at its feet, when we were sending our goods to every corner of the world unchallenged, we did not take advantage of it and build up our machine in the way we should have done. Instead of ploughing back what had been taken out, it went into profits.

Sir William Darling: Where?

Mr. Fairhurst: I will give my hon. Friend from Aberdeen an illustration of what I mean—

Sir W. Darling: That is much too far North.

Mr. Fairhurst: I apologise, I should have said the hon. Member for South Edinburgh (Sir W. Darling). I am referring to the textile industry and to coalmining. It has been said that coal and cotton made the industrial might of this country. The profits taken from the textile industry have been fabulous. There is no argument about it. Yet we find our textile industry, even today, in a condition where it cannot meet foreign competition. Why? Because we omitted to build up our machine and improve its mechanism. That was due simply to the stubbornness of the people who controlled the factories of this country. They said, "The machine is all right, we need not improve it." And so we found ourselves losing badly in the international race of productivity.

Sir W. Darling: Would the hon. Gentleman allow me to interrupt? It is a most interesting argument, but has he reflected upon what happens to profits, even phenomenal profits of the character of which he spoke? Would I be wrong in saying that three things happen to them: one, they are used for reinvestment in industry; two, they are used for investment overseas; three, they are used for consumer goods. The limitation on the third category may be very small. Would I not be right in saying that all accumulations in any British industry, textile or coal, were reinvested in the standard of living of this island?

Mr. Fairhurst: The answer is that all the profits extracted from industry are not reinvested. The luxury trades can answer the question of the hon. Gentleman.

Sir W. Darling: What happens to the luxury trades?

Mr. Fairhurst: Even the prices of today do not matter in the luxury trades. People buy luxury goods because they have the money to buy them. Returning to the textile industry, I say that we did not equip our machines with the profits taken from it as we should have done. Had we done so, we would have been in a far better position today to meet

the next challenge that may come before long from foreign competition in that industry. All these profits have been gathered out of the labour of the textile workers. The same thing applies to miners. The same applies to engineers. The universal cry today is that prices are too high and purchasing power has a tendency to fall. If prices are too high, what is the reason? I suggest that the Treasury ought very closely to examine the number of times people handle a commodity as it travels round, from the time when it is produced to the time when it is sold. Every time it passes from one to another, a percentage goes on, and I suggest that thousands in this country are getting an extraordinarily good living, but never see the commodity they are passing on.

Sir W. Darling: The transport industry, for instance.

Mr. Fairhurst: The Chancellor ought to examine this question. There are plenty of drones in this country who could be put to useful work. Does the hon. Member for South Edinburgh agree with that?

Sir W. Darling: Is the hon. Member thinking of railwaymen?

Mr. Fairhurst: We are indebted to my hon. Friend the Member for Stoke for this very interesting discussion on something of much importance to ordinary men in the street. They are expecting that the Chancellor will ease the burdens they have to bear and make it possible for wages to buy sufficient commodities, not only food, clothing and shelter, but give them a little extra to enjoy luxuries they have earned by working hard. If they have to do nothing but work hard and cannot enjoy anything, people begin to ask whether it is worthwhile living at all, and the incentive to work is lost. It is on the hewers of wood and drawers of water that the main burden falls, although I agree that administrative workers and the executives play their part. These factors must co-operate as never before. The question arises whether they can co-operate when we know that in the majority of industries the sole objective is to make more profit and not to consider how much social good can be done. When the people feel that these industries are nationally owned and controlled and that production


is in the interests of the community at large, we shall have a revolutionary experience which will do nothing but good.

9.43 p.m.

The Economic Secretary to the Treasury (Mr. Douglas Jay): The hon. Member for Stoke (Mr. Ellis Smith) has raised a large subject at very short notice. I assure him he was wholly right in one thing, his surmise that tonight I should be unable to anticipate my right hon. and learned Friend's Budget Statement.
My hon. Friend the Member for Stoke, having taken note of the answers I gave him this afternoon, went on to pay a compliment to the Co-operative movement for the help they have given in bringing down prices and the cost of living. I wish to associate myself with that My right hon. and learned Friend has often paid that tribute to the Cooperative movement and we know that we shall continue to have their assistance. I do not think my hon. Friend the Member for Peterborough (Mr. Tiffany) was quite correct in saying that there had been a lack of co-operation between the Ministry of Food and the Treasury in assisting the Co-operative movement in this matter. As a matter of fact, there was continuous co-operation, and as a result some of the increased allocation of materials was made to the Co-operative movement, which roused so much wrath on the benches opposite.

Mr. Tiffany: It is true that certain increased allocations were made at Christmas, but they were far below the fair share which the movement should have had for a considerable time and no increase was made in the allocation in regard to flour and bread.

Mr. Jay: I was merely making the point that there was co-operation between the Treasury and the Ministry of Food. The hon. Member for Stoke also paid a tribute to the trade union movement. Their co-operation in the past year has been of the utmost assistance to the whole recovery which we have achieved. At the same time, however, I repeat that we have had co-operation also from the great bulk of industrial companies in the matter of dividends. True there have been one or two weak spots, but by and large the requests for voluntary limitation of dividends have been observed. Had it not been for the help we have had from all

three sections of the community, our policy could not have succeeded.
The hon. Member for Stoke said that the major part of the credit for our recovery, in the last year is due to the manual workers. Broadly speaking, that is true, but I agree with the hon. Member for Stroud (Mr. Parkin) that I should deprecate any suggestion that there is any large section of the community which has failed to play its part. When we have had an increase in production of 25 per cent. over three years, it is perfectly obvious that most workers and managers both in private and in public enterprise, must have done a pretty good job.
The hon. Member for Stoke mentioned also indirect taxation and its part in deciding the level of prices. He rather forgot, I think, that in last year's Budget we made sweeping changes in Purchase Tax by switching the burden from the more necessary to the less necessary goods which did, of course, result in falls of prices over a very wide field. Indeed, we relinquished about £50 million of revenue in doing so. He spoke also of indirect taxation in relation to food prices, but he failed to point out the part played by subsidies in the past year in holding down the cost of living. Were food subsidies not now being paid the retail food index would rise by something like 12 or 13 points.
I think it was my hon. Friend the Member for Peterborough who spoke about the possibility of restoring subsidies to other items such as clothing and shoes. My answer to that is that my hon. Friend is being very unrealistic if he thinks that anything of that kind is possible. He is not really facing up to the economic and financial situation which confronts us. After all, we have established and extended very extensive social services, including the National Health Service in particular, during the past year, and those services must be paid for. If we allow ourselves to get into a situation of having a Budget deficit in order to pay for them, the inflation will be made worse instead of better.
Several hon. Members have asked how we can make further progress in bringing, down prices. In the Debate a few months ago on the cost of living I expressed my opinion that, broadly speaking, there were really only three ways of materially


getting down prices. One is by a movement of the terms of trade in our favour; that may or may not happen, and we can do very little about it. The second, and most important, is by producing more and at a lower cost. The third is by saving more. I do not think that hon. Members tonight have placed enough emphasis on the importance of both public and private savings in the battle against inflation and against the cost of living in the next year.
The hon. Member for Stoke finally said that he was pleading for reconsideration—those were his words. I am not quite sure what he meant, but if he meant that he was pleading with the Government to relax the disinflationary policy we have followed in the past 18 months, I must assure him that the time has certainly not come to do so. My impression tonight is that he and some other hon. Members may have underrated the difficulties in the economic problems which still face us. The inflationary pressure is still there and the terms of trade are still running against us. The dollar deficit, although it has been greatly reduced, is also still there. We are not actually losing gold on balance—that is merely because the Marshall Aid payments we are receiving are covering the dollar deficit—but the deficit itself is still there. It would be misleading the House and the country to suggest that this is the time or opportunity for any major relaxation of any of the main measures in our policy of disinflation which we have been following throughout the last 18 months.

Mr. Spearman: May I ask the Economic Secretary whether he would give an assurance that he will consider sympathetically the plea put forward by the hon. Member for Peterborough (Mr. Tiffany) that when the Purchase Tax is reduced, the whole burden should not fall upon the distributor?

Mr. Jay: I have been continuously and exhaustively considering that ever since the Finance Bill, and so have a number of other people.

Orders of the Day — POLICE TRAINING COLLEGE (COMMANDANT)

9.52 p.m.

Mr. Willis: In the short time at our disposal I wish to raise a matter which has recently caused some concern to Scottish Members, namely, the recent appointment of the Commandant to the Central Police Training College. There have been a number of Questions down on the Order Paper for the past three weeks about this matter, which indicates the general interest taken in it, and tonight I wish to ask some further questions about it and to raise certain matters in connection with the appointment.
When my right hon. Friend was answering Questions on this matter he pointed out that the qualifications for this position did not necessarily include any knowledge of police work at all. He suggested that what was required was a man who had had experience in organising colleges of this type. As I understand the position, there were in Scotland, prior to the establishment of this Central Police Training College, three police training centres, each of which was in charge of a police officer. I should have thought that one of those officers, who had an experience of organising a college in which instruction was to be given to policemen, would have been suitable for this job. It seems to me that the decision not to appoint one of them indicates that the committee advising the Secretary of State did not think that these people were the proper people for the jobs that they had originally held In addition, out of the total number of applications for this job, 18 were made by police officers. There were seven from Scottish police officers and 11 from police officers with experience in England. Surely an officer could have been found from amongst those 18 applicants to fill this position. It does seem to cause some reflection upon the police forces that a suitable choice could not be made from them.
Arising out of that second point, what will be the effect of this upon the police force? My hon. Friend the Joint Under-Secretary was, asked this question on 1st February:
Could the Joint Under-Secretary say what effect he thinks this will have on police recruitment, which at present is disappointingly slow?


Rather flippantly, I thought, he jumped up to the Box and said:
None at all, I should think."—[OFFICIAL REPORT, 1st February, 1949; Vol. 460, c, 1505.]
Of course, he had not thought very much about it. The fact that this appointment has not been given to a member of the police force has caused serious discontent in the police forces. While the actual appointment may not have affected recruitment, discontentment in the police force will affect recruitment. One cannot expect men to join if the members of the force are complaining about this and about the lack of opportunities for promotion. That appears to be an important consideration. As the hon. Member for Kilmarnock (Mr. Ross) suggested in his Question, we are finding difficulty in building up our police force. I understand that we cannot get all the recruits that we need. I should have thought that in those circumstances every step would have been taken to see that the police force was at least content and satisfied with what happened inside it.
The third point I wish to mention is that quite a number of people have expressed the view rather forcibly that military service should not be a qualification for any appointment connected with the police force. The type of training involved is different. The police have to settle civilian problems and it has been felt in the past that the person who has been trained in the Armed Forces is not exactly suitable for this type of work. Nobody would belittle the service of a man who has been in the Royal Air Force. That was necessary, and probably in the Air Force the man has done a job for which we are grateful, but we must consider whether that type of training is the kind that we want associated with our police force. I ask the Joint Under-Secretary whether this matter was fully considered. Those are some of the points about which we should like rather more information than we have had during Question Time, and I trust that my hon. Friend will do his best to answer.

9.58 p.m.

Mr. Carmichael: In the almost complete absence from the House of the official Opposition, I hope that the Joint Under-Secretary of State will not mind some criticism from his own benches. We have good reason for raising

this issue. Some time ago the view was expressed by the Opposition that jobs were being created for the boys. A matter which has disturbed me in recent years in this House has been the appointment of military people to a good number of posts in civil administration. That is one of the reasons why I raise objection to this appointment.
Let it be clearly understood that there is no personal objection. I do not know the gentleman concerned and I accept entirely from the Secretary of State for Scotland that he is a man of very great qualifications in regard at least to his service in the Air Force. But there were some 72 applications. I think one of the strong points made by the Secretary of State was that only seven men with police service in Scotland made application and that the highest rank was that of inspector. One only requires to examine the case and one can find a reason why prominent and competent police officials in Scotland did not make application.

It being Ten o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Hannan.]

Mr. Carmichael: Air Vice-Marshal Graham was appointed Commandant-Designate at a salary of £1,000, rising to £1,200 a year. With an exalted designation of that kind, he was entitled to a very much higher salary than that. Commandant-Designate is an amazing title for an entirely new office in Scotland. I say that there are a good number of police officers in Scotland holding much higher salaries than that, and, obviously, competent people with long experience of the police service were not prepared to make application for a post of this kind. If we want an efficient police service I do not think that salary is high enough. That is my genuine opinion, and if we want a person to be in command of a college which is to give some directions to the police forces of Scotland, this salary is not comparable with the salaries paid to chief constables in many of the burghs.

Sir William Darling: What about the headmasters, who hold comparable offices?

Mr. Carmichael: I do not know that they are comparable offices, because they


are looking after children and a constable is not looking after children so much as people like the hon. Member and myself. I say that that is one of the factors in this situation that must be examined. I happened to be associated with the Glasgow Corporation at the time when this college was first suggested, and prior to the institution of the college three schools were in operation in Scotland, all directed by people with long police experience.
There has been discontent in the police forces, and I want to know whether this is the opening of the door to the military type. In the police service since the war, we have taken many leaves out of Hitler's book, as we have done in connection with many of our services, and there has been some movement in a military direction in the last three or four years, more than at any time in peace for very many years.

Sir W. Darling: Under this Government.

Mr. Carmichael: In actual fact, I do not think the hon. Gentleman will have any other kind of Government. I am not disturbed about that. It is the case in the City of London that the chief of the Metropolitan Police has always been a person with long military training. I hope that is not going to be introduced into Scotland, because if so, I can see a future Secretary of State standing at that Box and telling us it is necessary to have military men in charge of our recruits because we have had military men in charge of the well-trained police. I think that will create more discontent in the police forces.
There is one other point. We all know that there has never been that happy understanding and fellowship which should exist between the civilian population and the police. There is no need to deny it, there always has been a strained relationship betwen the police forces and the civilian population.

Sir W. Darling: No.

Mr. Carmichael: I do not like it. I think it has been diminishing in recent years, and I think the police are now being recognised as responsible guides in community development. One has to look back to the number of policemen in our

big cities of Scotland who have been called upon to exercise physical force in carrying out their duties, though a very limited amount of such force is now required because the police are coming closer to the community as responsible guides in civic development but I think an appointment of this kind tends to leave an impression with the ordinary citizen that we are introducing a military man in order to equip the police along military lines.
We are grateful both to you, Mr. Speaker, and to the Secretary of State for Scotland for making it possible for us to raise this issue. Before the Debate concludes, I want an assurance from the Joint Under-Secretary of State which will not only satisfy the police federation and the young, ambitious and competent men in the force nowadays, but will satisfy the civilian population that this person was selected because of some extraordinary capacity completely outwith his training in the military machine; and I want an assurance that in future, chief constables and responsible people in the counties and burghs of Scotland, guiding and directing the operation of the police force, will not be drawn from the military ranks. If the Joint Under-Secretary can ease our minds on that point, I shall be satisfied. Some day we may visit the college and probably appreciate that the man appointed is quite competent in his work, but in the meantime we are anxious to get some satisfaction from the Joint Under-Secretary.

10.7 p.m.

Mr. Hector Hughes: I am sure the House will have come to the conclusion that neither of the hon. Members who have spoken has made out a case against this appointment in principle, in theory or in fact. As I understand it, the method of making such an appointment is that the Secretary of State considers it judicially upon evidence which is laid before him. We do not know what was the evidence laid before him and no attempt has been made by either of the hon. Members to indicate that there was improper evidence.

Mr. Willis: This is not a question of making out a case against the appointment. It is a question of raising the matter in order that we may get certain questions answered and have greater knowledge, and in order that the police


force in Scotland itself may be reassured about this matter, because they have considerable anxiety.

Mr. Carmichael: And so that the Government can make out a case for the appointment.

Mr. Hector Hughes: I should have thought that the hon. Member for North Edinburgh (Mr. Willis) who presented this argument—it is not a case—would at least have given some reason why this appointment was not properly made or was not a proper one. The hon. Member for North Edinburgh said that complaints had been made against the appointment on grounds of principle or on some ground which was not specified. He did not produce a single complaint, nor did he specify what was the nature of those complaints.
What is the principle involved? It seems to me that the test of this appointment, as indeed of any other appointment, should be fitness for the job. That involves consideration of individual qualities, of training and of record. It seems to me wrong to argue that a military man is unfit for such an appointment just because he is a military man, regardless of whatever other qualifications he may have had. Military men have been found fit for such appointments in the past, and notwithstanding what was said by the hon. Member for Bridgeton (Mr. Carmichael) I submit that the training of a military officer is comparable in many respects to training for high office in the police. The individual qualities which make for success in one, often have made for success in the other. In the past many distinguished military men have occupied positions such as this with distinction and success.
Turning to another aspect, is there anything in the record of this particular officer that makes him unfit for this appointment. None has been specified. The hon. Member for Bridgeton said there is no particular objection to this appointee on personal grounds or on grounds of training, and there both hon. Members seem to rest, I will not say their case, but the argument which they presented. They rested it on the mere fact that the appointee was a military man and thereby, ipso facto, unfit for such appointment. I contest that. I suggest that

the proper principle to apply is the test of fitness for the job. The Secretary of State should weigh the evidence, and we do not know what the evidence before him was. Therefore, the questions which were put by the hon. Member for North Edinburgh should be answered in such a way as to indicate why this appointment was properly made.

10.10 p.m.

Sir William Darling: I should like to intervene in this discussion because for some three years I was a police officer. I believe I was a moderately successful police officer in that period. The idea that police officers are the only persons suitably qualified for such appointments by art and science is, I think, a rather narrow one. It hardly does justice to the hon. Member for North Edinburgh (Mr. Willis) and to the hon. Member for Bridgeton (Mr. Carmichael). What the Secretary of State surely had in mind was the appointment of someone trained and qualified not for the duty of a chief constable, but for the organisation, not of a police service, but of a college to instruct, in the broadest possible way, men and women who are entering the police service.
Faced with that problem, faced with that duty, quite rightly, I think, the Secretary of State cast his net far and wide. As the hon. Member for Bridgeton has said, there has been a closer drawing together between the police forces and the general public. If a college is being set up for the instruction of police officers, then surely one with a closer association with the general public, and less with those bred and born in the police forces, is exactly the kind of person to whom should be entrusted the charge of such a college. I think the Secretary of State is justified in this appointment.
I have some connection with the police forces of Scotland, and I am not aware that there is a vast, widespread dissatisfaction current in the Police Federation. In fact, I take the exactly opposite view. The facts seems to support the view I take. Of the three qualified and experienced men in the police forces who had themselves had experience of setting up colleges at Aberdeen, Glasgow and Edinburgh, I am informed, none applied for this post. Why? Because they felt that their future, if they had a future at


all, was not in the organisation of a college but in the proper line of promotion which leads to the office of chief constable.

Mr. Carmichael: Does the hon. Gentleman not realise that the salary of £1,000 is exactly £1,000 less per annum than that paid to the Chief Constable of Glasgow, and is, I have no doubt, £750 less than that being paid to the Chief Constable of Edinburgh? Quite obviously, in such circumstances, no one would expect those gentlemen to make application for the post.

Sir W. Darling: Exactly. I do not think the hon. Gentleman sees how his words fail to express his ideas. Quite obviously, the Secretary of State was not appointing a chief constable. Had the Secretary of State appointed a chief constable, or a person of the same emoluments as are paid to a chief constable, to run the Police College of Scotland, he would at once have raised all sorts of problems and cross-purposes. Quite definitely he was appointing someone to a college and to the organisation of a college for training men and women. We do not pay to any university professor teaching the art and practice of commerce a salary equivalent to the income of a multiple storekeeper whose income ranges from £15,000 to £25,000 a year; and yet we do not argue that, because the professor is not paid such a large sum of money, he is not qualified to teach the subject.

Mr. Willis: It is because we have no idea of values.

Sir W. Darling: The hon. Member for North Edinburgh and the hon. Member for Bridgeton—I have noticed it on more than one occasion—suffer greatly from an agreeable, an amusing, an entertaining, but slightly disconcerting confusion of thought. There are two definite sorts of persons before us—chief constables who get from £1,500 to £2,500 a year, and organisers of training colleges. The Secretary of State does not suffer from that confusion of thought. He is not thinking of chief constables or of those who might be promoted to be chief constables, but of persons qualified by wide and general experience for the business of organising a training college. I think

he has made an admirable and, I am sure, a successful appointment.
If the idea of the hon. Member for North Edinburgh and the hon. Member for Bridgeton is to be carried to its logical conclusion, policemen are only to be eligible for any position in connection with the police force. If that is so, I would remind the hon. Member for Bridgeton that we had in Glasgow a distinguished chief constable who came there, I think from one of the irregular forces in Southern Africa. The people of Glasgow made him chief constable, and he was a successful chief constable. Did he remain a chief constable or become even the organiser of a training college? No, this distinguished and able man has been retained in the public service, but retained in a larger, wider and more useful sphere far removed from the police service. I beg my hon. Friends not to take this narrow, stratifying view of public service. Let men of ability move freely from one section of public service to another, so that the maximum good of the public may be achieved

10.16 p.m.

Mr. Rankin: I think that we are indebted to the hon. Member for North Edinburgh (Mr. Willis) for raising this matter tonight. It will at least enable the Under Secretary to let us know exactly the functions of this individual and to state clearly the purposes of the college because, in spite of what the hon. Member for South Edinburgh (Sir W. Darling) has said, one would assume that the purpose of a police college is to train men to become efficient and knowledgable police officers. Therefore it is a great and important qualification that the principal of such a college should be an individual who has himself gone along the road which the men whom he is training propose to follow. I think that applies in almost any sphere that one cares to examine. I would say to the hon. and learned Member for North Aberdeen (Mr. Hector Hughes) that whenever we start appointing joiners to a high legal position, he will be the first member to make a great noise about that appointment

Mr. Hector Hughes: Mr. Hector Hughes rose—

Mr. Rankin: I have only a minute to go, and I simply cannot give way, much as I should like to give way to my hon. and learned Friend. I submit that we


are not dealing simply with the fitness of this individual; we are dealing with what may be a practice. Every young man who enters the British Army is told that he has a field marshal's baton in his knapsack—even if it remains there. Surely we are not now going to promise to everyone who enters the R.A.F. that he has a policeman's baton in his knapsack.

10.19 p.m.

The Joint Under-Secretary of State for Scotland (Mr. Thomas Fraser): Perhaps it will ease the mind of the hon. Member for Tradeston (Mr. Rankin) if I say that every man who joins the police force has a chief constable's badge in his pocket, because in fact promotion in the police force is confined to the police force. It is one of the few services in the country which is a closed shop. That is the answer to the hon. Member for Bridgeton (Mr. Carmichael), who asked if this was evidence of military intrusion into the police service. It is not.
As has been made clear in answers to Questions during the last week or two, my right hon. Friend was not in fact asking for a policeman to take on police duties. He was not inviting applications for someone to serve in the police force. He invited applications from persons with qualifications enabling them to take over the responsibility of organising and generally running a college for policemen. The person ultimately appointed had experience of organising a college not so very different from this one; but not one of the applicants who had police service in Scotland had any such experience. The man appointed has been much in the news recently, and I hope he does not mind the publicity he has had. I regretted it a little, although this Debate, if it results in dispelling any misapprehension caused in Scotland in recent weeks, will have served a very useful purpose.
I should have thought that there was no reason why the police in Scotland should regard this appointment as any slight upon the police force. Indeed, it is not uncommon for policemen on retirement to take jobs in the public service, and in other spheres. As with the Air Force and the Services generally, one finds that the vast majority of members of the police force retire from that service

at an age when they have still lots of energy left in them, and lots of capacity for rendering a very useful service to the community. Why the police should themselves take so much advantage, and rightly, of the opportunity provided to them of serving in other spheres after they have served their full time in the police and yet take exception to a man who has served his country in the Royal Air Force taking a job such as this after he has retired from the Air Force, I just do not know. I cannot understand that attitude of mind at all. Let us assume that the objection is not to an ex-Service man being appointed, but merely to the appointment of someone who has not had experience of the police service. Again we are brought up against the fact that the policemen themselves take advantage of the same opportunities, although I think it would be unfair of me to recite the sort of jobs that are taken by retired police officers.
I have got to know representatives of the policemen in Scotland very well in the last few years. I occasionally preside over the Police Council, when I meet spokesmen for all ranks in the service, and I regard them as very reasonable people. I am, therefore, surprised that they should have protested and complained to Members of Parliament about my right hon. Friend having made this appointment. Perhaps I should take this opportunity of saying that the police force generally in Scotland are doing a very commendable job of work at the present time. True, they are short staffed, but nobody really thinks that the appointment of Air Vice-Marshal Graham as Commandant of the Police College will have any adverse effect on recruitment. I do not think that there can be any considerable discontent within the police service at the appointment of Air Vice-Marshal Graham.
Some people made a noise about it; some people did not like the idea. Of course, they did not; but I cannot understand their making a noise about it. I think that in this regard some people have been most unreasonable, and if I know the representatives of the different ranks in the police service in Scotland—as I think I do—then I am pretty certain that they would not make any protest about the appointment that has been


made. My hon. Friend the Member for Bridgeton said the salary was hopelessly inadequate, and that was the reason for the small number of applicants. I do not know whether some of my hon. Friends who have contributed to our discussion tonight would take the view that the starting salary of £1,000 with pension, etc., is a totally inadequate salary. Many of them would take the view that the salary given to this person is one that would result in applications from a wide range of very competent administrators.

Mr. Carmichael: Is it true that a number of people have been appointed to part-time positions by the Government at £750 and £1,000 a year with very few hours work per month to do? It is on that comparison that I say this salary is far too small.

Mr. Gilzean: In view of the fact that this is an academic appointment to some extent, what are the academic qualifications of the person in question?

Mr. Fraser: He does not require academic qualifications.

Mr. Gilzean: If there are no academic qualifications, why should he be the head of a college?

Mr. Fraser: He is the commandant of the college. I can think of other colleges in Scotland where the principals are by no means equipped academically. I had better not mention their names, otherwise I might be accused of criticising the principals of colleges. As I said the other day in reply to a Question, the commandant's main duties will be to organise training courses for the various classes of students at the college and to arrange for the service of suitably qualified instructors and lecturers. I do not think one need have police experience to be able

to do that. He has also to supervise accounting and other arrangements. I do not think it takes a person with police experience to do that. Generally, he has to ensure that the college is an efficient establishment. I proceeded to say that in organising the college and the training courses, the commandant will be working in close association with an advisory committee, of which the chairman is His Majesty's Inspector of Constabulary for Scotland, and other members of the committee are police officers representative of all ranks of the police service. He is going to be fully advised by a competent body as to the nature of the courses to be undertaken at the college.

Mr. McKinlay: I would have taken that job myself.

Mr. Fraser: We have had a useful discussion, but there it is. We had 72 applicants for the job and only seven of them had police experience in Scotland. There was a selection board appointed by my right hon. Friend to consider all the applications. On that selection board there was a local authority representative in the person of a county convener. There was representing the constabulary in Scotland His Majesty's Inspector of Constabulary, and there was a representative from the Scottish Office and from the Civil Service Commission. They made the recommendation in favour of Air Vice-Marshal Graham. Because of the qualifications that Air Vice-Marshal Graham had and his experience of college work, my right hon. Friend could not but accept the recommendation.

The Question having been proposed at Ten o'Clock and the Debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Half-past Ten o'Clock.